What is DeFi?
DeFi is an abbreviation for decentralized finance which is one of the categories of dapps (decentralized applications).
DeFi usually consists of dapps related to cryptocurrency lending, trading and stablecoins. According to the data provided by State of the DApps, DeFi is one of the most active dapp categories.
In terms of transaction volume, DeFi apps are the leading decentralized applications in the ecosystem along with decentralized exchanges.
DeFi applications involve smart contracts that allow people to use the apps without trusting third parties. Smart contracts can be verified by the users and are usually audited by different developers before going live.
Anyone around the world, regardless of his or her residence, citizenship etc. can use DeFi apps and access various financial services.
In short, DeFi is a new growing space in the crypto which revolutionizes the traditional finance with decentralized, transparent, efficient and open financial services.
The best DeFi apps – Decentralized finance applications
DeFi applications might be seen as complex at first, though they are at backend, it is usually very easy to use DeFi apps thanks to user-friendly interfaces and straightforward guides.
Cryptocurrency lending apps and decentralized exchanges are currently the most popular DeFi apps. Users can lend and borrow cryptocurrencies and enjoy spot and margin trading while they are in control of their funds.
Compound, dYdX, Uniswap and 1inch can be given as examples to the most popular DeFi apps today, which you can check out on sites that track dapps such as DappRadar.
To learn how to use these dapps, check out the reviews below:
How to use DeFi apps
Choosing a cryptocurrency wallet to interact with dapps
To start using DeFi apps, you need a safe cryptocurrency wallet that allows you to interact with dapps on your browser or mobile device.
Some of the most popular cryptocurrency wallets for accessing Ethereum-based dapps are MetaMask, Ledger Nano X and mobile wallets like Coinbase Wallet and Trust Wallet.
Most people use dapps with their MetaMask wallet. If you have a hardware wallet like Ledger Nano X, you can connect it to MetaMask and use dapps in a much safer way.
If you will use DeFi apps with large amounts of cryptocurrencies in your wallet, it better be a hardware wallet.
Ledger hardware wallets isolate private keys in a secure chip, so there will be no possibility of exposure of private keys to the internet.
You can also use Trezor hardware wallets. But Ledger is supported by more dapps and safer with its secure chip.
By using dapps with a hardware wallet like Ledger, you can be sure about the security of your cryptocurrencies anytime.
Other cryptocurrency wallets like MetaMask are also quite safe and suitable for most users, but such ”software wallets” are usually not recommended for storing large amount of cryptocurrencies.
Before getting a cryptocurrency wallet to interact with DeFi apps and other dapps, you can check out the guides below:
Which DeFi apps to use?
If you are new to DeFi and don’t know how to get started, you can try using decentralized exchanges like Uniswap which are quite easy to use once you learn the basics.
Cryptocurrency lending apps such as Compound Finance and Aave and decentralized exchanges like dYdX are not suitable for beginners and involve various risks.
To learn how to make money with dapps and have an overview of the general decentralized application market, you can read this article.
You can get started by making a trade on Uniswap or 1inch. Check out the reviews below to learn how to use Uniswap and 1inch:
