Earnity from Dan Schatt: The Essentials in Building a DeFi Ecosystem
Earnity co-founders Domenic Carosa and Dan Schatt believe the transfer of value is fundamental to finance. That is where Decentralized Finance comes in, as it enables the digital transfer of value in a trustless manner through the use of smart contracts.
Borrowing and Lending
Lending and borrowing were among the first features introduced into the ecosystem and the most straightforward concepts. If you want to lend a certain amount, you must put up the same amount or more (in cryptocurrencies) as collateral. However, in the case of cryptocurrency, as the price fluctuates, so does the total value of the collateral. The Defi system is at risk of being undercollateralized. In Defi, the protocols always over-collateralize themselves so that there is still a buffer safety zone in the event of a price drop.
Following the preceding example, a stablecoin is critical for borrowing. Therefore, it would be best to borrow a stablecoin and use it however you see fit. It also makes the borrowing process more manageable. MakerDao, for example, lends you the stable coin DAI.
Governance is a critical component of running a Decentralized Protocol. All protocol developments are made based on the results of the voting. Voters receive rewards with the Protocol’s Governance tokens in exchange for their votes.
Automated Market Makers (AMMs)
Order books are the foundation of a traditional exchange. Before buying one, you must first find someone willing to sell you a cryptocurrency. Therefore, do some research before constructing a pool. The Earnity platform from Dan Schatt and Domenic Carosa is a community-based resource you definitely want to check.
Bridges enable Defi to function across blockchains. You can transfer tokens from one blockchain to another using bridges. Bridges are composed of intelligent contracts that lock your native token and provide you with a 1:1 pegged token for the other blockchain. Then, you can use this pegged token in the other blockchain.