Hi friends, it's nice being here again to participate in this week's homework Task. It was a nice Lecture from our able professor @gbenga. Without much delay, I will want to take on the homework Task below. **DECENTRALIZED FINANCE ECOSYSTEM (DeFi)** ![image.png](https://cdn.steemitimages.com/DQmYdJG7hciuRobMz5gnBSqanX9ZyDcrTaS2zjZQs8NjDs2/image.png) Decentralized Finance which is often called DeFi refers to the move from old-fashioned, centralized financial systems to shared-access finance enabled by decentralized technologies that is built on the Ethereum blockchain. Decentralized Finance is a platform founded on the blockchain which doesn't need the central financial third-party activities to implement it's financial activities, but contrarily, it uses smart contract on the blockchain. This is however, a move from centralized platform to shared-access platforms powered by decentralized platforms that is solidly built on the Ethereum blockchain. DeFi has retained expansion on expand its financial instruments and protocol networks resulting from building more leverage on its stablecoin to tokenized BTC and borrowing and lending. **BENEFITS OF A DECENTRALIZED FINANCE** There are many benefits the DeFi could offer but the following are few of them. However, DeFi deduces it's prominent benefits with the aide of the Ethereum blockchain protocols as indicated by the platform. 1.Transparency All transactions carried out in the blockchain are accessible to all users and parties as the DeFi protocol allows for disclosed source for community audit and perusal for which it is built. 2.Immutability. This is the state of being unchangeable. It does not allow the tampering of transactions in blockchain thereby increasing the auditability of data in the ecosystem, security which in turn lifts the confidence of users. 3.Permissionless Dissimilar centralized finance, DeFi is known by its open, permissionless access; this implies that irrespective of location and most times without any required minimum amount, anyone with an internet connection and perhaps crypto wallet can access DeFi application. 4.Programmability DeFi are high in programmable smart contracts with capacity to create new financial instruments and digital assets. 5.Self-Custody DeFi market participants keeps custody of their assets and have control of their personal data by using Web3 wallets like MetaMask to interact with permissionless financial applications and protocols. **SOME OTHER BENEFIT OF INTERPERABILITY.** **USES OF DeFi** **Trading** Trading in the DeFi platform include a variety of activities, from derivatives trading to margin trading down to token swaps, these cut across an ever-growing and integrated exchange network, liquidity pools as well as marketplaces. Traders on decentralized exchanges benefit from speedy transactions, lower exchange fees, as well having total control of their assets. **Synthetic assets** Just like to stablecoins, synthetic assets are crypto assets which makes provision of exposure to other assets such as fiat currencies, gold and cryptocurrencies. **Compliance and KYT** Dissimilar to the centralized platform where users severe KYC upgrade process compliance, the DeFi solely work with KYT which aids risk tracing in real and prevents financial crimes and fraud. **Data and analytics** DeFi pulse and Codefi Data which are new DeFi apps are used to analysize risks in the platform as well as make comparison between liquidity yield and track DeFi protocols. **Used as Derivatives** By implication, DeFi can represent real-world assets which includes; bonds, cryptocurrencies, Fiat currencies and commodities. **Savings** Venturing into lending pool protocols like Compound, numerous DeFi apps gives interest-bearing accounts that can gain rapidly more than traditional savings accounts with regards to a dynamic interest rate tied to supply and demand. Other uses of DeFi includes: Asset management, DAOs, Data and analytics, developer and infrastructure tooling, DEXs, Gaming, insurance, Margin trading, payments, stablecoins, tokenization, etc. **PROJECT/PROTOCOL IN THE DeFi ECOSYSTEM** There are of course many project/protocols built and already running on the DeFi protocols. However, I will discuss the **UNISWAP DeFi** ![image.png](https://cdn.steemitimages.com/DQmTE4WCdiJC2yt3WSfDBciHMmxJdS6cDo6oHjgtfxPj1tY/image.png) UNISWAP is a decentralized application built on Ethereum blockchain which is consist of prearranged computer programs that allows the swapping of cryptocurrency with unicorn. Uniswap like the decentralized platform, do not work with the concept of trust rather, completely rely on the functionability of its blockchain protocols. In order to receive value from the other user, some conditions must be met. UNISWAP platform users have the capability of lending to the liquidity pool which are already made accessible to qualified borrowers that fulfilled the requirements with some fees paid back to the lender as interest rate in the ecosystem which also serve as compensation for deposited funds. This however implies that it facilitate transactions between Ethereum blockchain and cryptocurrency. **UNISWAP IN THE ETHEREUM BLOCKCHAIN** UNISWAP protocol, obviously is a liquidity pool on the decentralized Ethereum blockchain which allows users trade without involving the activities of intermediaries or third-parties. It is a DApp that doesn't require centralized unit to authorize trades but is accompanied by high degree of decentralization and censorship resistance. It doesn't enter in listing process; being a liquidity pool, hence there are of course no listing fees charged on the DApp. **HOW DOES UNISWAP WORK** UNISWAP is patterned after the Automated Market Maker(AMM) to take the form of Constant Product Market Maker that dose not fall in line with the regular pattern of exchange that works with some other books. There are two values of tokens in the pool provided by the Liquidity providers which can be ETH or ERC-20 tokens and as a result of the volatility of the market, liquidity pools are composed of Stablecoins like USDT, DAI, or USDC to keep in possession the value of tokens in the pool. Assuming in the ETH/USDT liquidity pool, let's say the ETH portion to be a and the USDT portion to be x. Uniswap takes and multiplies these two quantities in order to calculate the total liquidity in the pool. Let’s take the product to be k. The most important idea behind Uniswap is that k must remain constant, meaning the total liquidity in the pool is constant. a * x = k Take for instance, preshdan wants to buy 20 ETH at 3000 USDT making use of the same ETH/USDT paring liquidity pool as aforementioned, this automatically will increase the USDT cost in the pool by 3000 and reduce the ETH by 20. This implies that the price of ETH will increase as a result of the transaction that decreased it's quantity I the pool. This is the mechanism that determines the pricing. **HOW DOES UNISWAP MAKE MONEY** Every fees generated from the liquidity pool goes the liquidity providers hence leaving the founders with nothing, but lately, fraction of these fees was set aside for Uniswap development and it's version improvement. Meanwhile, 0.3% of the transaction fee is paid to the liquidity providers which goes into the pool to serve for onward claim for the liquidity providers. **UNISWAP UNI TOKEN** This is a native token known as UNI, regarded as a token of governance. The token allows it's holders to vote when new developments and changes has taken place in the platform. These changes may include, changes in fee, how newly reprinted token should be distributed to developers and the Community as well. The UNI token was created as a result of competition pool by SUSHISWAP, who made efforts to offer incentives to users to have them switch over it's DApp. This prompted the creation of 1billion UNI tokens with more than 15illion given out as nouns to all UNISWAP users. Each person was seen then to received about 400 UNI tokens which amounted to over $1,000. Funny bas it may be, SushiSwap is a fork of Uniswap. **HOW TO MAKE QUICK USE OF UNISWAP** * Access pay by using https://uniswap.org * Click on the “Use Uniswap” & select your preferred wallet * Login into your wallet and allow for synchronization. * Go to swap token option on your screen and input all details then click on swap * A preview window of the transaction will come up then you will need to confirm the transaction on your ERC-20 wallet. **CONCLUSION** Thanks for reading through my piece. Special thanks to all who put big smiles on my face with Auto Upvote for always being supportive to me . Best regards Cc: @steemcurator01 @steemcurator02 @gbenga