Explore Decentralized Finance: Yield Farming, DEXs, and Liquidity.
Decentralized Finance (DeFi) recreates traditional banking services (lending, borrowing, trading) without the bank. Instead of a manager approving a loan, a Smart Contract does it automatically based on collateral.
Platforms like Uniswap allow you to swap tokens directly with other users via an Automated Market Maker (AMM), rather than an order book.
Users deposit pairs of tokens (e.g., ETH + USDT) into a pool. Traders trade against this pool. In return, the depositors earn trading fees. This is called "Providing Liquidity."
If you provide liquidity and the price of one token skyrockets compared to the other, the pool automatically sells your winning token to buy the losing one to keep the balance.
Result: You might end up with less money than if you had just held the tokens in your wallet. This loss is "Impermanent" until you withdraw.
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