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An Introduction to Decentralized Finance (DeFi)

June 15, 2023


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Among all the market trends in the past few years, Decentralized Finance (DeFi) is the only niche that successfully established a foothold in the crypto market. After more than a year of yield farming, lending, and using decentralized exchanges, the community has finally turned the newest addition to the blockchain industry into a trend that is here to stay...if not even replace the protocols of old.

Do not make the mistake of thinking that DeFi is new. Turning traditional financial instruments decentralized was always the dream of zealous blockchain fans. However, nothing of the scale that we see now was ever possible until 2020.

Technologies like smart contracts and decentralized oracles improved to a level where developers can create seamless and automated systems that allows a project like Uniswap or Aave to exist, which is why so many platforms today focus on capturing the DeFi experience.  

By this point, you hopefully got up to date with our blockchain and introduction to cryptocurrency courses. While learning about DeFi is achievable even without any prerequisite knowledge, we still urge readers to acquaint themselves with blockchain technology before venturing into something as complex as decentralized finance.

Now that the prelude is concluded let us explain the purpose and goal of this series.

Introduction to DeFi is exactly what it sounds like. It is designed to wholly introduce yourself to what the new market segment is about, how it works, and which products and services it offers. By the end, you should understand:

  • What drives DeFi
  • The main objectives for our decentralized future
  • How Ethereum and smart contracts synergize with DeFi
  • Decentralized exchanges
  • Lending
  • Derivatives
  • Yield farming
  • Insurance (Coverage)
  • Stablecoins
  • How governance models bring complete decentralization
  • Why DeFi is not yet another fad

As with all our series at the Shrimpy Academy, the Beginner's Guide to DeFi also begins with lessons that offer abstract explanations. After all, our goal is to transfer a feeling for what decentralized finance strives to achieve before ultimately heading into technical details. That way, you are more likely to navigate with ease when learning how the market works in practice.

This concludes our summary of Shrimpy's DeFi course. The next lesson presents readers with a glossary of key DeFi terms so that you have an easier time understanding the upcoming lessons.

We note that this segment offers as many new concepts as our blockchain series, which is why having patience is recommendable when attempting to reach mastery. Most community members have absorbed the intricacies of DeFi during the span of a year, so do not feel disheartened if this feels too much for you.

Want to join the DeFi revolution?

Take the next step by harnessing the power of Shrimpy Advisory, our cutting-edge crypto robo-advisor. Shrimpy Advisory makes it easy to navigate the DeFi landscape, providing you with customized, data-driven investment strategies tailored to your unique goals and risk tolerance.

With Shrimpy Advisory, you're not just a passive observer in the world of DeFi—you're an active participant, shaping your financial future with confidence.

About The Author:  
Marko is a crypto enthusiast who has been involved in the blockchain industry since 2018. When not charting, tweeting on CT, or researching Solana NFTs, he likes to read about psychology, InfoSec, and geopolitics.

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A Beginner’s Guide to Decentralized Finance (DeFi)