{"id":46809,"date":"2020-12-23T06:46:29","date_gmt":"2020-12-23T06:46:29","guid":{"rendered":"https:\/\/www.bridge-global.com\/blog\/?p=46809"},"modified":"2020-12-23T07:31:25","modified_gmt":"2020-12-23T07:31:25","slug":"what-is-defi","status":"publish","type":"post","link":"https:\/\/www.bridge-global.com\/blog\/what-is-defi\/","title":{"rendered":"DeFi: What Is It and How to Get Started Coding for It"},"content":{"rendered":"\n

DeFi is rapidly becoming one of the most important components of the crypto sector and this is a big opportunity for developers.<\/p>\n\n\n\n

Bitcoin’s meteoric rise has drawn record interest from institutional investors<\/a>, futures traders<\/a>, regional<\/a> and national<\/a> government, and curious consumers<\/a>. For developers, there\u2019s a significant opportunity too. <\/p>\n\n\n\n

The decentralized finance (DeFi) sector is continuing to experience significant growth and demand for blockchain developers is skyrocketing. This has opened up a unique window of opportunity for would-be developers to cut their teeth on some potentially game-changing projects. If they have what it takes.<\/p>\n\n\n\n

What Is Decentralized Finance Anyway?<\/h2>\n\n\n\n

DeFi projects are a specific variety of blockchain projects designed to emulate, or copy, existing financial instruments or products. These take on a variety of forms, but the most popular at the moment are DeFi lending platforms and DeFi cryptocurrency<\/a> exchanges. <\/p>\n\n\n\n

\"What<\/figure><\/div>\n\n\n\n

To get a better understanding of how DeFi actually works let\u2019s take the example of a simple lending platform.<\/p>\n\n\n\n

Bob has Ethereum (ETH) that he doesn\u2019t need right now. He wants to make money from it but doesn’t want to sell it. So he goes to a lending platform and \u201cstakes\u201d or locks 100 Ethereum to the platform. In exchange, he is given a set percentage of interest.<\/p>\n\n\n\n

Laura wants to borrow some cryptocurrency. So she goes to the same platform and is connected with Bob, borrowing his Ethereum. She then uses this to fund some crypto trades, makes a profit, and returns the funds with interest to Bob.<\/p>\n\n\n\n

This is how the biggest DeFi projects<\/a> work:<\/p>\n\n\n\n

Maker:<\/strong> A lending platform with $2.81 billion locked
WBTC: <\/strong>A Bitcoin converter with $2.32 billion locked
Compound:<\/strong> A lending platform with $1.66 billion locked
Aave:<\/strong> A lending platform with $1.53 billion locked
Uniswap:<\/strong> A decentralized lending platform with $1.35 billion locked
<\/p>\n\n\n\n

The key to all these projects is the use of smart contracts. These are essentially coded contracts that enable DeFi projects to bypass the need for a centralized organization. A contract is designed to only trigger once all the requirements listed in its parameters have been met.<\/p>\n\n\n\n

At the moment, the overwhelming majority of DeFi projects are based on Ethereum. This means that they are all built to the ERC-20 token standard and using the Solidity coding language (more on this shortly). This is good, because it makes things a little easier for any budding DeFi developer.<\/p>\n\n\n\n

What Skills Does a DeFi Developer Need?<\/h2>\n\n\n\n

The fundamental skills required for a DeFi Developer are the same as those of a regular developer. A foundation in, or strong understanding of, computer science and IT are essential. And any developer serious about making the shift to DeFi will also need to understand the different building blocks of any crypto project: data structures, cryptography, and networking.<\/p>\n\n\n\n

Aside from core dev skills, there are a number of other abilities a DeFi dev should have some understanding of. While a developer won\u2019t need a background in banking or finance to work on a project, a strong understanding of those topics will be invaluable. Before applying to a project, it is essential that you understand what it is aiming to do and whether it will bring value.
<\/p>\n\n\n\n

\"What<\/figure><\/div>\n\n\n\n

In terms of specifics the most important thing any DeFi developer will need is a strong grasp of ERC-20, and Solidity:<\/p>\n\n\n\n

ERC-20<\/a>:<\/strong> Refers to tokens designed solely to be used on the Ethereum blockchain that meet a list of community-defined standards<\/a>. These tokens are all created using smart contracts with the Solidity programming language.
Solidity<\/a>:<\/strong> Solidity is a high-level object-orientated language for implementing smart contracts. It was influenced by C++, Python, and JavaScript. The language is designed to interface with the Ethereum Virtual Machine and blockchain. You can get started with the Solidity Tutorials<\/a>.<\/p>\n\n\n\n

<\/p>

<\/p>

Ethereum and Solidity are just the start, however. The best way for you to prove your DeFi chops would be to build some practice projects of your own. The following videos should help you get a grasp of the basics.<\/p>