If you've heard of DeFi but don't know where to start experiencing it, this article is for you. We not only explain the principles but also guide you through several key products, from trading and lending to staking, step by step into on-chain finance.
1. What is DeFi?#
DeFi, short for Decentralized Finance, means "decentralized finance." Essentially, it moves the financial services we are familiar with (trading, borrowing, saving, earning interest) onto the blockchain, automatically executed by smart contracts, without relying on banks or intermediaries.
Its key concepts are three:
On-chain operation: All transactions and rules are written in contracts, accessible to everyone.
Open access: Anyone in the world can participate as long as they have a wallet.
Asset composability: Various protocols can be built together like Lego, forming new financial structures.
2. Core Gameplay of DeFi#
DeFi is not just about trading coins; it is a complete financial system. Here are several key modules:
Decentralized Exchange (DEX) | Token swapping, cross-chain, low slippage trading | Uniswap, Curve, 1inch
Lending Platforms | Earn interest by depositing coins, borrow money with collateral | Aave, Compound
Liquidity Mining (LP) | Deposit dual tokens to earn fees + incentives | Uniswap V3, Balancer
Staking | Lock tokens to earn rewards | Lido, Rocket Pool
Stablecoin System | Hold decentralized USD stablecoins | MakerDAO (DAI), Liquity (LUSD)
3. Recommended Experience Route#
1. Open a Wallet and Prepare Assets
Download MetaMask or the OKEx web3 wallet and set up an account.
Transfer a little ETH (for paying fees) + USDC or other mainstream stablecoins into the wallet. It is recommended to choose the Ethereum mainnet (ERC20 network); although gas fees are higher, it is worth the experience. Later, when using it for real, you can choose Layer 2 chains with lower gas fees.
2. Experience DEX: Uniswap
Uniswap: A decentralized trading platform where users can freely exchange tokens without intermediaries, with all transactions automatically matched by smart contracts.
Open uniswap.org and connect your wallet.
Click "Swap," for example, exchange some ETH for USDC, and feel the "no registration, direct trading."
You can try "Add Liquidity," putting ETH and USDC into the trading pool to earn fees.
3. Experience Lending: Aave
Aave: A decentralized lending protocol where users can deposit crypto assets to earn interest or use assets as collateral to borrow other coins.
Open aave.com and connect your wallet.
Deposit USDC or ETH to start earning interest.
After collateralizing a certain amount of assets, you can borrow another coin, trying to understand the collateralization ratio and liquidation mechanism.
4. Experience Staking: Lido
Lido: A liquid staking platform where users stake ETH to receive tradable stETH, earning yields while continuing to participate in other DeFi operations.
Open lido.fi and stake ETH to receive stETH.
stETH is a tradable staking certificate that can also participate in other DeFi protocols.
4. Experience Reminders: Observe and Reflect on These Questions While Operating#
DeFi is not just about clicking a few buttons; it is a "re-understanding" of the financial system. During the actual experience, consider observing and thinking about the following questions:
1. What is gas fee?
Why do I have to pay a little ETH for each transaction?
Sometimes it's just a few dollars, but other times it can be dozens?
Why is the gas fee on the Ethereum mainnet particularly high, while Layer 2's gas is very cheap?
Reminder: Gas is the fee for "renting blockchain resources," not a platform's transaction fee, but a payment to block producers (miners/validators).
2. What are Uniswap, Aave, and Lido doing?
Trading, lending, and staking are essentially all about interacting with smart contracts.
Why are these three protocols referred to as the "DeFi Triumvirate"?
Have you noticed that they can actually interact with each other (for example, using stETH to collateralize borrowing on Aave, then trading on Uniswap)?
Reminder: Products in the DeFi world can be "assembled" together to form your own financial portfolio.
3. What is "permissionless" trading?
Why can I use these platforms directly without even registering an account?
Platforms also won't freeze accounts or restrict operations; what is the essential difference from traditional finance?
Reminder: "Permissionless" is the soul of DeFi, meaning anyone with a wallet can equally access financial services.
4. Where are my assets? Who controls them?
Compared to the money in banks or coins on exchanges, are these assets more "transparent"? More "controllable"?
If I lose my wallet's mnemonic phrase, will my assets be completely lost?
What responsibilities come with this freedom of "controlling your own assets"?
Reminder: The "freedom" of DeFi also means you are your own bank; controlling assets also requires you to be responsible for security.
5. Conclusion: DeFi is More Than Just "Trading Coins"#
DeFi is a financial system that can be freely constructed; you are both a user and a bank, market maker, and borrower. It is disrupting the way traditional finance operates. If you've used Alipay or WeChat Pay, now it's time to try to understand a "financial system without Alipay."
In traditional finance, we are used to "entrusting" our money to banks or platforms. DeFi asks you to relearn how to control your own assets, make your own judgments, and manage your own risks.
Behind every button is a reconstruction of the system.
Starting with DeFi doesn't necessarily mean chasing profits; more importantly, you can finally use your own hands to touch the future financial system.
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