Wondering what #defi is, who lends and who borrows i the crypto world, this tread is for you with a concrete example of a @TransferWise crypto equivalent.

#defi means decentralized finance. The goal of crypto is to transform the financial system into its decentralized version: not (less) controlled by an oligarchy. In 2017, when the world got to know crypto, most people got familiar with coin (bitcoin) / tokens (Ethereum).

These are the currencies of this new system (bitcoin being dollar/gold). What about all the rest ? Stock exchanges, banks,loans and investing, currency conversions ?

Lending/borrowing and currency conversions have existed for a while in crypto in a "classic" shape: @TheRealBlockFi @cryptocom: you register, identify (KYC), block some of crypto and they give you a % APY. @ShapeShift_io to convert cryptos.

This @defi craze is about doing this the crypto way. Let's take the @UniswapProtocol: one goes on their app, connects their wallet and change a coin to another, paying a fee. But similar to what @TransferWise is doing, this is peer to peer conversion.

The counter par is the "pool" side: someone who owns a coin, say ETH, can go on uniswap and lend it into a smart contract to be exchanged against another token. So when somebody converts on uniswap, they are actually exchanging their coin against somebody else

Why would you lend ? well as a lender, you get a share of the fee of course ! You can get out of the pool at any time, getting back your token (or other token you accepted to exchange against). What happens if everyone wants out at the same time ? I'm sure you can guess.

#Defi is also about lending/borrowing. There are many protocols but let's use @compoundfinance. one can go there and lend their coin(say BTC). On the other side, another one will want to borrow BTC. They will have to lock the equivalent amount of something else they own (ETH,usd)

The borrower will pay a % to the pool and the lender will receive their share as long as they participate in the pool. Hence you don't lend to someone but to a pool, which rewards you.

Where $COMP gets interesting is that the governance of the pools are decided by $COMP token holders, which you can buy or get as a lending reward. A trend toward a real decentralized protocol.

Who borrows and for what ? as @BlockFiZac kindly pointed out to me, crypto borrowing is about liquidity and not buying a new car. Traders might borrow some TUSD to pay for taxes while locking their BTC, market maker locking their ETH to pump liquidity in a new token

All this happens in permission less protocols running on ethereum.Most of #defi isn't very decentralized yet but it will go there eventually.Not everything is ideal of course. There's big some technical issue (MakerDAO bug/hack, http://year.finance  bug that lost several MUSD)

and there will be some scams among the projects (or some projects among the scams), but it is quite amazing to see how much has been achieved already and it makes you see the potential ! Hope this thread helped you understand it from a bird view.