From Confusion to Clarity - How I Learned to Understand DEFI

@sheisifiok

Female Defi Enthusiast aims to explain defi concepts and simplify confusing defi s...

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I struggled to comprehend DEFI from the perspective of a newcomer, often feeling lost and confused. Every time I attempted to grasp it, the complexity seemed to grow. However, I decided to dedicate focused time to studying and gaining a comprehensive understanding.

Through this process, I discovered that there are two distinct approaches to understanding DEFI: as a crypto trader or enthusiast and as a complete beginner.

DEFI and Cryptocurrency

Allow me to elaborate on these two positions. DEFI, or decentralized finance, emerged as a solution to the limitations of traditional cryptocurrencies. It can be considered as crypto 2.0 or "crypto-promax."

DEFI originated from the shortcomings of cryptocurrencies themselves, as they could not fulfill certain financial functions. Hence, DEFI utilizes cryptocurrencies as its foundation.

To help you grasp this concept, let me provide a different analogy: Think of blockchain as the father and cryptocurrencies as the mother of decentralized finance.

Together, they strived to change the world and assist others.

However, they faced challenges in realizing their vision. While blockchain acted as the breadwinner in the realm of finance, cryptocurrencies had their own issues. They were unable to produce the desired outcomes, leading to limited impact and criticisms.

Consequently, their collaborative efforts were labeled as a failed union or a futile endeavor. This analogy aims to emphasize that blockchain serves as the driving force behind decentralization, while cryptocurrencies are instrumental in achieving financial innovation.

Currently, there is no other technology that offers comparable decentralized capabilities.

To better comprehend DEFI as a beginner, I needed to establish a connection with its vision. As an individual who had never utilized cryptocurrencies or digital assets before, the concept did not initially excite me.

I lacked the motivation to explore further, which hinders the development of necessary skills.

A Journey Into Decentralized Finance

However, I embarked on a journey to immerse myself in the vision of decentralized finance, despite being a non-crypto trader.

As an introspective and analytical reader, I require a deep connection for concepts to make sense to me. Thus, I sought ways to relate to the idea of DEFI as a complete beginner.

It proved challenging, given that DEFI is often regarded as crypto 2.0 or an advanced stage of cryptocurrencies.

Therefore, I delved into understanding the true essence of decentralization in finance, examining its original purpose and the initial plan behind it.

Throughout my research, I stumbled upon an eye-opening example within the context of Nigerian banks and their exorbitant charges. The amount of money these banks accumulate through various fees is staggering.

Despite regulations mandating a maximum fee of 50 nairas, they often exceed this limit. I researched extensively, nearly penning an article on why Nigerians should embrace DEFI.

However, I realized that my intended audience was the Web3 community, and I needed to tailor my writing to defi projects rather than advocate for crypto activism.

Moreover, I explored the challenges faced by individuals seeking loans in Nigeria. The stringent requirements and credit score evaluations imposed by traditional banks highlighted the need for an alternative solution.

Witnessing the financial struggles of ordinary Nigerians and comprehending their desperation reinforced the significance of DEFI. This research journey even led me to examine the 2008 financial crisis, which further emphasized the flaws of traditional banking systems.

I gradually began to grasp the fundamental shortcomings of existing cryptocurrencies and the potential of DEFI to address these limitations.

As my goal is to become a DEFI writer in the Web3 community, my focus lies in crafting pieces centered around DEFI projects and concepts. I aim to progress beyond the stage of being a beginner and gain deeper insights into DEFI.

For instance, I have explored the concept of staking, which offers the opportunity to generate passive income through staking crypto assets.

I envisioned creating a compelling Twitter thread that promotes the benefits of staking, encouraging people to explore this avenue for generating passive income and avoiding the volatile nature of crypto trading.

This marked my transition from being a stage one newbie to a stage two learner.

During my learning journey, I also encountered various threads discussing different protocols related to DEFI. Previously, these threads appeared incomprehensible to me, but now, I could understand the discussions and even engage with them.

Although I still have much to learn, such as tokenomics and research tools, I have gained a solid understanding of the overarching DEFI concept.

This improvement in knowledge demonstrates that the moment you delve into how DEFI enhances traditional crypto, you are already learning DEFI.

To summarize, the best-case scenario is a crypto trader who decides to explore DEFI. By simply starting to use platforms like Uniswap instead of COINBASE and gaining a basic understanding, they embark on their DEFI learning journey.

It's important to note that there is no such thing as a complete newbie in DEFI. You either fall into the category of being unfamiliar, i.e., a total stranger to blockchain, crypto, and DEFI altogether, or vested in crypto one way or the other but a beginner in the realm of DEFI.