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The rise of Defi: A guide for crypto, arbitrage, custody service and decentralized stock exchanges
The world of cryptocurrency has had a long way since it was founded in the early 2000s. The value of cryptocurrencies has recorded exponential growth from Bitcoin's initial price of $ 1 to today. As a result, traditional financial markets have recorded increasing competition through digital assets, which led to the increase in the alternative financial infrastructure (AFI). This article will go into three key areas: crypto, arbitrage, depot services and decentralized stock exchanges.
Crypto
Cryptocurrency is the underlying technology for most cryptocurrencies. The first successful cryptocurrency, Bitcoin, was launched in 2009 by a person or group using the pseudonym Satoshi Nakamoto. Since then, thousands of other cryptocurrencies have emerged, each of which have their unique features and applications. Some popular cryptocurrencies are Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).
Arbitrage
Arbitrage refers to the practice of taking advantage of price differences between different markets or stock exchanges to make a profit. This can be achieved by buying an asset on a market and selling at a higher price for another. Arbitrage is particularly useful for dealers who have a deep understanding of the underlying assets and their prices.
For example, if you see that Bitcoin (BTC) acts with $ 10,000 on One Exchange and Ethereum (ETH) with $ 5000 for another, you can buy ETH on the cheaper stock exchange and sell BTC on the more expensive exchange. The price difference between the two transactions would make a profit of 4,000 US dollars.
Depot services
Custody refers to the process of storing assets in a safe and controlled environment. This is of essential importance for every asset that requires long -term storage, e.g. B. cryptocurrencies or other digital assets. The deposit banks are responsible for the management of the security and transfer of assets to ensure their integrity and prevent unauthorized access.
Types of depot services:
- Traditional depot banks: These are companies that specialize in storing physical assets such as gold or cash.
- Digital deposit banks: These are online platforms that offer a secure memory for digital assets and often use blockchain technology to manage transactions.
- Decentralized Custodian (DCA) platforms: These are special deposit banks with which users can store and manage their assets in a decentralized network.
Types of decentralized exchange (Dexs)
A decentralized stock exchange (Dex) is an online marketplace where users can exchange cryptocurrencies without intermediaries such as brokers or stock exchanges. Dexs are created using blockchain technology and enable users to create new trading pairs, which enables more flexible and efficient trade.
Types of Dex functions:
- Maker-taker pairs: These are couples of tokens with which users can exchange a token for another without the need for third-party agents.
- Pages: This is a process in which users can stuck their tokens in order to obtain rewards or to participate in decisions on governance.
- Orakel:
These are external data sources that provide real information so that Dexs enable more complex trade strategies.
Diploma
Defi's rise has created new opportunities to access an alternative financial infrastructure. By understanding the basics of crypto, arbitrage, depot services and decentralized stock exchanges, users can make sound decisions about their investments. Regardless of whether you are an experienced dealer or just start, this guide offers an introduction to these important concepts and helps you to control the world of defi.
