WHAT IS DEFI? Exploring Decentralized Finance with DeFiChain (DFI)

Feb 17, 2023

If you’ve been using our platform for quite some time now, then it’s safe to assume that you’re familiar with DFI or may have even invested in it.

What makes it highly popular among Cake DeFi users? What are its functions? And what makes it one of the most promising digital assets today? In this article, we answer all of these questions and share other interesting facts about DFI.

So, let’s begin.

But first, what is DeFi?

DeFi or Decentralized Finance is a term used to describe a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries. With DeFi, you get access to services that are closely similar to what banks provide: you can borrow, lend, trade, buy insurance, earn interest on your assets and more.

What difference does DeFi offer?

It’s faster, peer-to-peer (no intermediaries) and doesn’t require paperwork. This is because DeFi draws inspiration from blockchain, the technology behind the digital asset bitcoin, which enables multiple entities to keep a shared ledger of transactions - thus, making it decentralized and not controlled by any single source.

And then there was DeFiChain

In 2019, the DeFiChain Foundation developed DeFiChain - a blockchain specifically dedicated to decentralized financial applications - based on the same premise that DeFi is built upon: that people should have control over their finances. In fact, to be more specific, the goal was to make decentralized financial services seamlessly accessible to everyone within the Bitcoin ecosystem.

And why Bitcoin?

In one of the earliest videos published by DeFiChain, Julian Hosp - a well-known contributor to DeFiChain - explained that “We wanted to develop something that is actually built around the ecosystem that we believe in the most, which is Bitcoin.

He continued to say that “Ethereum is quite exciting but it has some flaws that are quite difficult to overcome. So, it made sense to have a foundation that is not for profit and start building Decentralized Finance on top of Bitcoin”

More About the Connection and Similarities Between DeFiChain and Bitcoin

Simply put, DeFiChain is a hard fork of Bitcoin. What does that mean? It means that much of DeFiChain’s programming code is similar to that of Bitcoin's

Furthermore, similar to Bitcoin, DeFiChain is a non-turing complete blockchain. This means it does not support any function apart from those needed for DeFi - which allows it to provide higher throughput and better functionality, specifically for decentralized applications (dApps) related to finance.

Finally, DeFiChain periodically anchors on the bitcoin blockchain. This means that for every few blocks, a specific data set from the DeFiChain blockchain is stored on the bitcoin blockchain.

What Makes DeFiChain Uniquely Different from Bitcoin

Bitcoin's scalability is quite limited, as it suffers from slow transaction speed and expensive transaction costs on the base layer. For this reason, DeFiChain opted for a hybrid proof-of-stake / proof-of-work consensus mechanism instead of Bitcoin's proof-of-work.

This is where DFI comes in

DFI is the native token of DeFiChain and is, thus, what staking participants use to verify transactions and to secure the network. Correspondingly, in exchange for their service, staking participants also receive DFI rewards

Other Functions of DFI (DeFiChain Applications)

Today, DeFiChain is widely popular among proponents of DeFi as it supports various dApps such as tokenization of assets, wrapped tokens, decentralized oracles, liquidity mining and more. Top 50 in Total Value Locked

For it’s part, DFI plays a particularly important role in the following dApps:

  • Decentralized assets - users may obtain loans in the form of dTokens (e.g. dTSLA, dGOOGL etc.) by creating vaults and depositing crypto as collateral with a minimum collateralization ratio of at least 150% (at least 50% has to be in DFI or DeFiChain's stablecoin DUSD).
  • The DEX (Decentralized Exchange): The DEX is the place where users can exchange DFI for other crypto or dTokens.

Other Interesting Facts About DFI

Similar to Bitcoin, DeFiChain also has a maximum supply of its native token. In fact, the maximum number of DFI that will ever be in circulation is 1.2 billion. Around half of those coins have already been distributed, and the rest should follow around five to seven years.

Also, anyone can submit a DeFiChain Improvement Proposals (DFIP) to modify an integral part of the blockchain or its mechanism, as well as a Community Funding Proposal (CFP) to fund an individual project that would benefit the DeFiChain community and the whole DeFiChain ecosystem.

All they need to do is to pay a fee of 10 DFI.

Generate passive income on your DFI

Through our platform, crypto investors from around the world are able to access various DeFi services and generate passive income on their favorite crypto. If you own DFI, you can do the same by allocating funds into the following services:

LIQUIDITY MINING - pair up your DFI with another type of crypto and generate passive income on both by allocating them into our Liquidity Mining service. For more information, you may click here.

EARN - if you find liquidity mining too advanced or risky, you may opt to use EARN instead. This service can be described as a one-sided liquidity mining service, as it allows users to generate passive income with just one type of crypto, while offering volatility loss risk protection to participants. For more information, you may click here.

STAKING - earn staking rewards by allocating your DFI into our Staking service. By staking your DFI, you support the DeFiChain blockchain network by contributing to its security and efficiency. For more information, you may click here.

BORROW - why HODL when you can borrow? Indeed, by using this service, you can use your DFI as a collateral to borrow funds in the form of the stablecoin called Decentralized USD (DUSD). For more information, you may click here.

FREEZER - lock up your DFI into our Freezer and get up to 2x the rewards. Users may choose to lock up their DFI for up to 10 years to generate the maximum cash flow.

What Other Ways Can I Receive DFI?

By participating in the following, users may receive DFI as a bonus or reward:

DFIP - users who have allocated their DFI into our Freezer can earn DFI bonuses by participating in DFIP voting. Have your say on which proposals should be approved by casting your vote using the official Cake DeFi mobile app.

LEARN AND EARN - put your crypto knowledge to the test and earn DFI as bonus if you pass the quiz on DeFiChain.

REFERRAL - refer Cake DeFi to your friends and earn bonuses in DFI for every successful sign up.

If you wish to generate passive income on your DFI or receive DFI bonuses but have not signed up for a Cake DeFi account yet, click here and take control of your financial destiny.



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