How to DeFi: Beginner

Index Synths provide traders with exposure to a basket of tokens without the need to purchase all the underlying tokens. The index will mirror the overall performance of the underlying tokens. Index Synths allow for exposure to particular segments of the industry and diversification of risks without holding and managing various tokens.

Why would you want to lock up a higher value of collateral such as ETH only to issue DAI with a lower value? You could have sold your assets directly to USD instead. There are three possible cases: You need cash now and you have an asset that you believe will be worth more in the future. ● In this case, you could hold your asset in the Maker vault

What is Snapshot? Due to rising Ethereum gas fees, costs to vote on-chain have become unbearably expensive, hindering small token-holders from participating in the governance process. Snapshot attempts to solve this by taking a snapshot of votes off-chain, effectively making the voting process gas-free.

Based on the top 5 stablecoins’ market capitalization, Tether dominates the stablecoin market with approximately 68% of the market share. Although DAI’s market share only stands at about 5%, its trading volume has been increasing at a much faster rate. DAI’s trading volume increased by over 158% relative to Tether’s growth of 95% throughout Q1 2021

Decentralized exchanges aim to solve this issue by allowing users to exchange cryptocurrencies without giving up custody of their coins.

TokenSets is a platform that allows crypto users to buy Strategy Enabled Tokens (SET). These tokens have automated asset management strategies that will enable you to easily manage your cryptocurrency portfolio without executing the trading strategy manually. With an automated trading strategy, you will not need to monitor the market 24/7 manually,

There are two types of DEXs: Order book-based DEXs Liquidity pool-based DEXs. Some popular Decentralized Exchanges include Uniswap, Kyber Network, Curve Finance, dYdX, and SushiSwap. Order book-based DEXs like dYdX and Deversifi operate similarly to CEXs where users can set buy and sell orders at either their chosen limit prices or at market prices

An example of an Inverse Synthetic Asset is Inverse Bitcoin (iBTC) which tracks the inverse price performance of Bitcoin. There are three key values related to each Inverse Synths - the entry price, lower limit, and upper limit.

To achieve the most optimum trading route for the best price execution and the lowest cost, 1inch makes use of their proprietary routing algorithm, Pathfinder. Pathfinder searches across various DEXs such as Uniswap, Balancer, and also 1inch’s own liquidity protocol (formerly known as Mooniswap), before providing a recommended route for the best tr