A Short Guide to DeFi and The Metaverse: What is it and Why Should You Care? by@nonamec3po

A Short Guide to DeFi and The Metaverse: What is it and Why Should You Care?

August 14th 2022 15,730 reads
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Decentralized finance is an environment in which participants have 95% control over their assets. The movement of funds takes place without the involvement of 3 individuals through a P2P network. The most popular blockchains that are used in DeFi are Ethereum, Solana and Binance Chain. The Metaverse consists of DeFi, NFT, Play-to-Earn games, cryptocurrencies and many other trends developing in parallel with the development of Metaverse. At the same time, the metaverse remains decentralized (just like the Internet) and accessible to everyone.
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Decentralized finance and the metaverse are mainstream today. In 2022, investments in these areas will increase exponentially, even despite the bear market. In this article, let's take a look at what DeFi and Metaverse are, what their prospects are, and why you should pay maximum attention to these areas. 

What is Decentralized Finance (DeFi)?

Decentralized finance is an environment in which participants have 95% control over their assets. Only the asset owner is responsible for its assets, since DeFi applications are not controlled by a specific owner. 

In traditional finance, the main role is played by banks and fintech applications, which are responsible for storing assets, accessing them and processing them. They act as an intermediary who can refuse services or access to assets at any time. They also track all transactions, have statistics and work according to the rules of regulators. 

In decentralized finance (DeFi), the movement of funds takes place without the involvement of 3 individuals through a P2P network. The network consists of validators (nodes) who simply record and confirm all transactions in the blockchain, while they do not have access to funds. 

Advantages of DeFi include full access for anyone with internet access, low transaction fees (depending on the blockchain and its load, some blockchains have fees of $0.0000025), and free access to various financial services such as lending and borrowing.

The most popular blockchains that are used in DeFi are Ethereum, Solana and Binance Chain. Each blockchain has different advantages, for example, the number of transactions per second, the consensus algorithm (PoW, PoS, PoH and others), the block confirmation time. 

To access DeFi, it is enough to have a crypto wallet. The most popular are Sapien Wallet, Trust Wallet and NEAR Wallet. You can create a crypto wallet in a few minutes.

The most popular DeFi apps

There are many different types of decentralized applications and new ones are constantly emerging. The most popular DeFi apps in 2022 are:

  1. Decentralized Crypto Exchanges (DEX). Such crypto exchanges do not gain control over the assets of participants, and all exchanges take place P2P. Examples of decentralized crypto exchanges: Uniswap, SushiSwap, PancakeSwap.
  2. Lending platforms. They are available to everyone and do not require compliance with certain criteria, and all interaction is carried out through smart contracts. Examples of lending platforms: Aave, Maker, Compound Finance.
  3. Platforms for farming. Such platforms allow you to multiply DeFi tokens with a high percentage, but the risks here are also high. Examples of farming platforms: Curve, Venus, Synthetix.
  4. Liquidity farming. This is a liquidity pool operating on the AMM principle, and its participants receive rewards in tokens. Examples of platforms for liquidity farming: Nominex, Binance, Huobi.
  5. Stablecoins. This is not a DeFi project, but a cryptocurrency attached to a certain fiat currency, which allows you to fix profits in a volatile market. Examples of stablecoins: DAI, USDT, BUSD.

These are the 5 most popular types of DeFi projects in 2022. Considering that DeFi is a young industry, their number is gradually increasing, as well as the share of popularity. 

What is a metaverse?

The metaverse is a new way of interacting with technologies, which is a developing concept of Web 3.0. The metaverse consists of DeFi, NFT, Play-to-Earn games, cryptocurrencies and many other trends developing in parallel with the development of Metaverse. 

The main thing to always remember about the Metaverse is that it is not one place. This is a collection of new digital spaces that people call the next iteration of the Internet.

Even today, media companies, music publishers, sportswear brands, cryptocurrency analytical platforms and other businesses are integrating into the metaverse. As well as rock stars, rappers, businessmen and opinion leaders.

At the same time, the metaverse remains decentralized (just like the Internet) and accessible to everyone who has access to the Internet. No single person or organization has complete control over the metaverse. Rather, there are many stakeholders and developers who are all creating a metaverse together.

Although the metaverse is at the beginning of its development, hundreds of virtual worlds already exist today, and new ones are being developed every day. The most popular virtual worlds in the metaverse:

  • The Sandbox
  • Decentraland
  • Meta
  • Microsoft Mesh
  • Roblox

All these virtual worlds are radically different and the ways of taking part in them are also different. For example, you may need to make an avatar, buy it on secondary markets, buy an in-game item as an NFT, or buy access to a specific DeFi project to join the virtual world.

What can be done in the metaverse? You can attend conferences, fashion shows, business meetings, sports events and chess tournaments inside the metaverse. Many well-known web2 brands have openly declared support for the technology or even about creating their own virtual world, for example, Disney.

How do you get into the metaverse?

This requires devices that support VR (virtual reality) technology. For example, Oculus VR glasses with two controllers that allow you to move your hands. Another example is a virtual reality helmet from Valve. 

One of the facts that the participants of the metaverse do not like is the unnatural movements of avatars in virtual worlds. This is due to the quality of the controllers – even the most expensive models cannot convey the exact movement of the hands or body. As the metaverses evolve, this problem will be fixed.

Conclusion

Now you know what the metaverse and decentralized finance (DeFi) are. Let's summarize a little. 

DeFi is a new financial system with great potential that requires users to understand how to use it in order to make the best solutions.

The metaverse is a virtual space where people can work, communicate, play and spend money. According to Facebook founder Mark Zuckerberg, if today they just view content, then in the metaverse they will be able to be in it.

Both DeFi and Metaverse are revolutionary, so the interest in them from people and companies will only increase. 

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