1) What is DeFi?
Whats DeFi? DeFi stands for Decentralized Finance, Decentralized finance is a form of finance that does not rely on central financial institutions such as brokerages, exchanges, or banks, and instead utilizes revolutionary smart contracts on blockchains, the most common being Ethereum.
2) How does DeFi work?
DeFi lending is collateral-based, meaning in order to take out a loan, a user needs to put up collateral – often ether, the token that powers Ethereum. That means users don't give out their identity or associated credit score to take out a loan, which is how normal, non-DeFi loans operate.
Using Crypto DeFi to generate passive income
One of the ways to generate passive income with Crypto is to utilize a DeFi platform to lend and earn interest with Crypto that would otherwise just be sitting around. It works like this: convert your crypto into Ether or directly into Dai (a stablecoin, pegged to the US dollar) and put it in a platform where you could lend it out and receive loan back with interest.
3) What does the future hold for Bitcoin DeFi?
Right now, more Bitcoin than ever before is being sent over to Ethereum; nearly $1 billion worth, as of September 2020. This is undoubtedly due to the rise of DeFi. As the scene has grown in popularity, so have the methods of making Bitcoin run on such platforms.
Companies in the space are reporting record amounts of Bitcoin being converted into ERC-20 tokens. As long as DeFi is popular, we will continue to see new companies work in this space to provide quick, easy and cheap ways to help Bitcoin work on DeFi platforms.