Crypto Academy Season 3, homework task for professor @stream4u | Advanced course : CeFi - DeFi - Yield. by bountyking5

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· @bountyking5 · (edited)
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Crypto Academy Season 3, homework task for professor @stream4u | Advanced course : CeFi - DeFi - Yield.
Hi Friends
How are you, I hope all will be happy and well, I am also well.
This is my homework post for my Prof. @sream4u. In this post, I will present my homework and gave answers to all questions.


![homewrok poster.jpg](https://cdn.steemitimages.com/DQmRUQY3tCrxjSiuhX9FAeBzLhrb8o3L66a1iyLdqFZsoMu/homewrok%20poster.jpg)

___


 ## What Is the Importance Of the Defi System?


<br>

The abbreviation of DeFi is Decentralize Finance. DeFi is a term given to financial services without having any central authority or someone in charge. DeFi is becoming more and more popular as the main use case for cryptocurrencies. The Defi system relies heavily on Assets, blockchain, and smart contracts, and Dapps that are developed on a blockchain. 

Using decentralized money like certain cryptocurrencies, that can be programmed for automated activities, we can build exchanges and many other companies that do not have any owner and are not controlled by anyone. 

Decentralize Finance can benefit the huge portion of the population that currently suffers from financial discrimination, high fees, and inefficiencies in managing their funds so the term of Decentralize Finance system aims to change our centralized system into a Decentralized Finance system. 

Defi System is the transperant. All transactions are publicly viewable, and smart contract codes can be analyzed online. When the transaction is successfully done then an update is sent to all ledgers within the Defi system, which provides the information of the current status of each transaction that is performed.

Some important features of the Defi system are that as below. 

1) Transparency
1) Interoperability
1) Free for all
1) Flexibility
1) Decentralization

 Advantages of Defi System:

1) Required Fewer Fees
1) Available twenty-four hours
1) Blockchain transparent
1) No need for KYC.
1) No need for any third person
1) Withdraw at any time. 
___
___

## Flaws in Centralized Finance
<br>
The centralized finance systems that the third person involves to access their funds. Users can not access full control of their assets due to the involvement of a third party. It causes limited access to your assets. 

For instance, Some centralized exchanges set the rule on transfer amounts of your assets at a time, so users can transfer amounts according to their rule. For example, a rule is set that a user can just transfer 2BTC at a time or in 24 hours.

If we talk about transaction costs in centralized finance, we will face high transaction costs through a centralized finance system compared to the decentralized system. Another Flaw that we face in this system is that It takes more time to complete the transfer process.

We can not use our assets according to our plan/decision under Centralized Finance because the third party has controlled our assets.

Through a centralized finance system, we can not make more money by investing our assets as compared to decentralized fiance.

The last and most dangerous flaw is asset/fund security. Centralized systems have authority over funds. One big mistake can cause us to lose our assets. Due to lack of security management if the system being hacked or delete the record then it will cause us to lose our assets
___
___
## DeFi Products. (Explain any 2 Products in detail).
<br>
The products that I am going to explain are "DAi" and "UniSwap Exchange".

### DAI

Nоw  we  will  tаlk  аbоut  аnоther  fully  deсentrаlized  stаble  соin  thаt  is  DАI.  Dаi  is  the  mоst  рорulаr  deсentrаlized  stаble  соin  by  fаr.  The  Dаi  stаbleсоin  is  а  deсentrаlized,  unbiаsed,  соllаterаl-bасked  сryрtосurrenсy,  with  а  stаble  vаlue  оf  1  US  dоllаr.  DАI  is  сreаted  when  а  lоаn  is  оbtаined  оn  the  MаkerDАО.  

MаkerDАО  is  а  deсentrаlized  оrgаnizаtiоn  built  оn  Ethereum  thаt  аllоws  сryрtосurrenсy  lending  withоut  the  need  fоr  intermediаries.  

The  рriсe  оf  DАI  is  соntrоlled  by  аn  аutоmаted  smаrt  соntrасt  system.  If  the  рriсe  hаs  а  high  fluсtuаtiоn  frоm  $1,  it  will  аutоmаtiсаlly  burn  оr  сreаte  Mаker  (MKR)  tоkens  tо  stаbilize  DАI's  рriсe.  If  the  MаkerDАО's  аlgоrithms  wоrk  аs  exрeсted  аnd  а  DАI  is  equаl  tо  $1,  the  MKR  hоlders  will  be  benefited,  beсаuse  the  tоtаl  suррly  оf  MKR  is  reduсed  аnd  mаkes  the  MKR  rаrer  аnd  mоre  vаluаble.

The  Mаker  рrоtосоl,  аlsо  knоwn  аs  the  Multi-Соllаterаl  Dаi  (MСD)  system,  wаs  the  first  widely  аdорted  Deсentrаlized  Finаnсe  (DeFi)  аррliсаtiоn,  аnd  оne  оf  the  lаrgest  DАррs  оn  the  Ethereum  blосkсhаin.  The  рlаtfоrm  аllоws  аnyоne,  аnywhere,  tо  generаte  DАI  stаbleсоins  bаsed  оn  сryрtо-bасked  аssets.  Оthers  саn  buy  DАI  thrоugh  а  brоker  оr  exсhаnge,  оr  simрly  ассeрt  DАI  аs  раyment.  In  аdditiоn,  beсаuse  оf  the  соmроsаbility  оf  the  рrоtосоl,  аnyоne  саn  build  оn  tор  оf  it.


### UniSwap Exchange

The founder UniSwap is Heyden Adams and it is an open-source platform. Uniswap Exchange is a decentralized exchange that is used for staking, yield Farminga, and swapping of Ethereum and ERC-20 tokens, etc. It is the Ethereum based exchange. We can swap ERC-20 tokens through Uniswap Exchange.

The working of UniSwap base on an Automated Marketing Protocol provides liquidity to the platform by lending or staking Tokens. Investors or traders can also swap tokens through Uniswap Exchange. Uniswap no need for any third party to complete any action or process.

It is good the thing that Uniswap does not charge any fee for listing any coin on this exchange.

___
___

## Risk involved in DeFi.
</br>

- The non-negotiable nature of the transaction causes a big risk in case of a wrong transaction made. Because If we talk about the P2P method No Third party is involved in your transaction. But in the CeFi system, everyone needs to complete the KYC step.

- The use of illegal DeFi can make the causes of online crime drug buying/purchasing, Terrorism, child trafficking because in the Defi system no third party is involved in your transaction, No one can ask any question for what is the purpose of your transaction, why and where you are transacting your assets. all these types of illegal dealing can be possible through online way with online payment in terms of Cryptocurrency.

- Smart Contract is another big risk in the Defi system. Smart contracts are just software codes that store the information of your transferring assets. If it is hacked that can become the case of losing your assets which is not safe for the user.

- Price Volatility is also another risk in the Defi system. we can see constant fluctuations in the price of assets. It can become the cause of high profit and high loss so the Defi systems can be affected by the Price volatility.


___
___

## What is Yield Farming?
<br>

Yield Farming allows the investor to earn fixed or variable interest by investing crypto assets in Defi System. Buying Eth is not a Yield Farming, but lending it on Defi to earn extra interest is an example of Yield Farming. so in a simple world, we can say that yield Farming is a decentralized system that allows the crypto investor to deposit and locking their asset and earn more crypto assets from them. Yield farming offer extra income through that your funds to others via lending or staking for a preset period of time on DeFi platforms 

For example, I have a wallet in which I have 1000 tethers and I want to earn extra income from it. So for it, I will need to use these assets on the Defi platform like uniswap, etc and by providing the liquidity pool I can earn some extra crypto. but rewards are calculated in terms of APY, and APR depends on the yield Farming type that we selected.


___
___

 ## How does Yield Farming Work?
<br>

In the DeFi system, Yield Farming works with the help of Liquidity Pools and Liquidity Providers. А  liquidity  рrоvider  is  a type of  investоrs  whо  deроsits  assests intо  the smаrt  соntrасt and The  liquidity  рооl  is  а  smаrt  соntrасt that is filled  with  саsh. Yield Farming provides the opportunity for investors to earn more rewards from depositing and locking their crypto assets in a decentralized exchange. 

The yield Farming in crypto is similar to the bank loan system, it means when the bank gave us loans then we pay the loan with interest. Same as it is, we get loan crypto assets from the exchange, and then we pay back yields interests in form of tokens/coins.

The Yield farming works on an Automated Market Maker to creates a Liquidity Pool with the help of smart contracts instead of the traditional order book. it works on the basis of a pre-defined algorithm.

___
___

### What Are the best Yield Farming Platforms and why they are best? (Explain any 2 in detail)
</br>
a) Pancakeswap
PancakeSwap is a decentralized exchange that is used for yield Farming, coin swapping of BEP-20 token, staking, etc. Pancakeswap works on Binance smart chain network that uses Automated Marketing Protocol to manage liquidity pools. Pancakeswap exists in the top decentralized exchange based on Binance smart chain network. we can earn from 8% to 250% APR by staking the assets. 

The website link is here. [Site](https://pancakeswap.finance/)


![Capture.JPG](https://cdn.steemitimages.com/DQmWP8i6VyEBYgnaqpZQYBuNnNXG2KMo5j7bWrn72ETyC9y/Capture.JPG)


#### Advantages of PancakeSwap
</br>
1) Fewer Fees.
1) Fast Transactions.
1) Very Secure.


b) Uniswap


Uniswap is also an exchange that also runs on the decentralized method. It is used for staking, yield Farminga and swapping of Ethereum and ERC-20 tokens, etc. It runs on the Ethereum blockchain that uses Automated Marketing Protocol to manage liquidity pools. Uniswap no need for any third party to complete any action or process. Uniswap has over $5B locked in its smart contracts. Investors can earn from 20% to 50% APR on staked assets.


The website link is here. [Site](https://uniswap.org/)


![Capture.JPG](https://cdn.steemitimages.com/DQmSdtuv6oyU83uqk5EXL9w8LtTGMQq6GkJYCp1bESrfaEJ/Capture.JPG)

___
___




### The Calculation Method in Yield Farming Returns.

</br>

There are two calculation methods for profits earned in Yield Farming.

(a) APR [Annual Percentage Rate]
(b) APY [Annual Percentage Yield]

### Annual Percentage Rate (APR)

APR (Annual Percentage Rate) is the key tool for comparing different loan offers and understanding the total cost of borrowing over the duration of a loan. APR does not include the compound interest.

Example No 1, I have 1000$ in my account with a 10% APR. I'll be charged 100$ in interest over the course of a year. That means the interest I am charged one day becomes the part of balance accruing interest. 

Calculation formulas are
Interest formula: A = (P(1+RT)
APR = ((Interest + Fees / Loan amount) / Number of days in loan term)) x 365 x 100


### APY [Annual Percentage Yield]

Annual Percentage Yield is based on compound interest as each yield is automatically reinvested. Basically, The annual percentage yield is taken from the borrowers in the Liquidity pools. The formula that we will use for this calculation is there. (1+r/n)^n-1.

For example, Investors invest $100 with an APR of  80%.

1) (1+ 80%/365)^365-1
1) (1+0.8/365)^365-1
1) (1.00211917)^365-1

APY = 1.22 x 100 = $122

Initial Investment + APY:

100 + 122 = $222

___
___

## Advantages & Disadvantages Of Yield Farming.

</br>

### Advantage of yield farming
</br>
The primary advantage of Yield farming is simple, to increase the profit. Its means that we can earn more income through Yield Farming by storing assets in the pool. Yield Farming gives us higher benefits and rewards.

Being early in the project and farm its token to then see that token increase immensely in value does provide a very high possible return.

Another big advantage of Yield farming is that we can partake in something that we believe by funding it early for a potential reward, making it a more inclusive way to seek. however, it is also important to remember that higher returns are almost always associated with higher risk.


### Disadvantage of yield farming.

</br>
The biggest disadvantage of Yield farming is the gas fees that every user pays to complete a transaction in the Ethereum blockchain that is quite high.

Smart Contract is the big risk and disadvantage of Yield farming. DeFi systems work on smart contracts, smart contracts are codes stored on the blockchain. if it is haked by a malicious hacker then we will lose all of our crypto assets. 

Lending a small number of assets will not give a higher profit. So for high profit, we need to lending a high amount of assets. But If we have a small number of assets and use it in Yield farming, then we can not earn a higher profit.
___
___

## Conclusion.
<br>
Decentralized finance is a great and complex financial system that provides impressive services and products. Defi systems have not any third party that examines and operate the overall ecosystem and process. in this lecture I learned that Defi projects provide great incentive but also provide high risks. It brings the opportunity to confirm any transaction by completing any KYC step. 

Yield farming is a modern definition project with exciting benefits. These benefits help a lot to boost the world of crypto. I also learn about how we can take profit and how we can calculate it in Yield farming. we can get yearly profits in yield farming that are calculated by APY and APR.  Yield Farming has huge economic potentials such as easy loans, high-interest rates.

___
___

<center>
🅡🅔🅢🅟🅔🅒🅣🅔🅓 🅟🅡🅞🅕🅔🅢🅢🅞🅡`
@sapwood

B̳̿͟͞e̳̿͟͞s̳̿͟͞t̳̿͟͞ ̳̿͟͞R̳̿͟͞e̳̿͟͞g̳̿͟͞a̳̿͟͞r̳̿͟͞d̳̿͟͞s̳̿͟͞

@bountyking5
</center>
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vote details (9)
@stream4u · (edited)
$2.17
Hi @bountyking5

Thank you for joining [The Steemit Crypto Academy Courses](https://steemit.com/trending/hive-108451) and participated in the Homework Task.  

|<center>Review Visit Level</center>|<center>Task Remark</center>|<center>Comment </center>|<center>Guidance, Feedback, Suggestions</center>|<center>Grade</center>|<center>Verification (Done, Hold)</center>|
|--|--|--|--|--|--|
|<center>First</center>|<center>Completed</center>|<center>The task is below expectations. Presentation is average.  The quality of content is below average. **Plagiarized Content** also found.</center>|<center>Information under DeFi statement is found as **Plagiarized**. You explained DAI and UniSwap Exchange as Defi products but these are one of the companies who work on a DeFi Product Stablecoin and DEX which is Decentralized Exchange, so here you first need to explain about the primary product  Stablecoin and DEX which is Decentralized Exchange then continue with the DAI and UniSwap for an example. Also more details expected here like what is their current use case, how about their future, also if you could look at some negative side and explain on it then it will look more informative.</center>|<center>3</center>|<center>Done</center>|


https://cdn.steemitimages.com/DQmWX5Hkb2D6TKczaqupm2qRaZg25Re1Bge2h9Mw4bG5kSG/image.png

Original Source [99bitcoins.com](https://99bitcoins.com/what-is-defi/) ⤵️

![image.png](https://cdn.steemitimages.com/DQmRv2BTV5uQWWNRLe8yi2Tefm3QP7qJFa41y9YwnWAa4Y7/image.png)

![image.png](https://cdn.steemitimages.com/DQmQAmB3XMcfR2dwQGYgyvwzz4j2hfq13fkZRtbfR7i8Q7y/image.png)

**<div class="phishy">It seems your first attempt to copy the content from other sources and use it in a task.  Please take Plagiarism seriously and work accordingly, also consider this is first notice as after the next Plagiarized detection you will be Blacklist in Steemit Crypto Academy Community.</div>**

<br>

Your Homework Task verification has been done by @Stream4u, hope you have enjoyed and learned something new.

Thank You.
@stream4u
[*Crypto Professors : Steemit Crypto Academy*](https://steemit.com/cryptoprofessor/@steemitblog/the-steemit-crypto-academy-the-first-crypto-professors)
#affable

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vote details (1)
@bountyking5 ·
Respect sir, @stream4u 
i tried to post my own original concept. 96% content in my orignal and unique. just a single lime is plagriazed.i dont know how we write same as orignal source. But i am really ashamed about it. please Ignore my mistake.
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@stream4u ·
Hi @bountyking5,

I can understand your concern, hope you have completed the Achievement task [Content Etiquette](https://steemit.com/hive-172186/@cryptokannon/achievement-3-mentor-by-cryptokannon-content-etiquette) or you are aware of the Plagiarism. 

96% content is your original and unique, yes and you tried well in this hence you received a grade. When Plagiarism content is found the task gets 0 grade, but you did well in 96% hence I have given a grade for that 96% + considering plagiarized content.

But still provided information that is not up to the mark and you need to explore the topic good with quality content, for that, I have also provided you the information in the Guidance, Feedback, Suggestions.  You need to take more research and study to understand it which then helps you to explore the topics with all possible information.

For you, it may be just a single line but still, it's a plagiarized line and still, I have given you a grade for your other content with considering Plagiarism.

> i dont know how we write same as orignal source.

This happens because you are only looking at the content, words. It is actually good to refer multiple sources as a part of the research, self-study. While checking sources we should not look at the content, words, we have to learn and understand it first, if you feel difficulty then we can use google translator to understand the concept in our mother tongue. Once you understand the concept then you will come to know and it will also increase your level of research, self-study.

Hope you will take this as self-improvement and I am sure you will do great in your all future tasks.

Cc:  @sapwood, @steemcurator01

<br>

Thank You.
@stream4u
[*Crypto Professors : Steemit Crypto Academy*](https://steemit.com/cryptoprofessor/@steemitblog/the-steemit-crypto-academy-the-first-crypto-professors)
#affable

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