What are DeFi contracts?
Asked 4 years ago
Good day. Since they don't use exchanges, brokerages or banks, what does DeFi use on a blockchain? Thanks
Anderson Ezie
Wednesday, February 02, 2022
Funds on DeFi platforms are added by individuals like you or institutions acting and interacting with DeFi protocols as individuals. That is one of the benefits of DeFi since everyone is given a fair chance to participate.
For adding your funds which facilitates transactions on DeFi platforms, the platform issues you interests in form of LP(Liquidity provider) tokens which you can stake to earn more rewards, or exchange for tradeable assets anytime you wish. Liquidity pools enable DeFi platforms to make money and most platforms allow users to create pools by adding the same quantity of each asset such as Bitcoin/USDT to the pools.
If you meant the mechanisms that enable transactions, it is the codes written on whatever blockchain provides the base layer for the platform accessible to users.
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