🎉 The #CandyDrop Futures Challenge is live — join now to share a 6 BTC prize pool!
📢 Post your futures trading experience on Gate Square with the event hashtag — $25 × 20 rewards are waiting!
🎁 $500 in futures trial vouchers up for grabs — 20 standout posts will win!
📅 Event Period: August 1, 2025, 15:00 – August 15, 2025, 19:00 (UTC+8)
👉 Event Link: https://www.gate.com/candy-drop/detail/BTC-98
Dare to trade. Dare to win.
Decentralized Finance Comprehensive Analysis: Core Concepts, Application Scenarios, and Detailed Explanation of AMM Mechanism
Decentralized Finance Overview: Core Concepts, Application Scenarios, and Operating Mechanisms
The Essence of Decentralized Finance
Decentralized Finance ( DeFi ) utilizes blockchain and smart contracts to create financial products and services. Compared to traditional finance, DeFi has the following characteristics:
The core of DeFi lies in its decentralized architecture, relying on blockchain and smart contracts to achieve automated execution without the intervention of traditional financial institutions.
Main Application Scenarios of Decentralized Finance
The DeFi ecosystem encompasses many subfields, with key application scenarios including:
Staking for PoS consensus: Investors delegate tokens to validator nodes to earn network reward sharing.
Provide loans: Deposit idle funds into the fund pool, borrowers pledge assets to borrow and pay interest.
Provide liquidity: Deposit token pairs in DEX to provide depth for trading, earn fees and rewards.
Use yield aggregators: One-stop management of various Decentralized Finance strategies to improve investment efficiency.
Lock tokens to participate in governance: Hold project tokens for the long term to gain governance rights and additional benefits.
Overview of Stablecoins
Stablecoins are a special type of cryptocurrency designed to maintain a stable value, typically pegged to fiat currencies or assets like gold. The main types include:
Stablecoins provide an important measure of value and medium of exchange for the Decentralized Finance ecosystem.
DEX Operating Mechanism - Analysis of AMM Model
DEX mainly adopts an automated market maker ( AMM ) mechanism, allowing trading without an order book. Taking Uniswap as an example:
Projects like Curve adopt a hybrid AMM model to achieve lower slippage and risk in stablecoin trading.
The Future of Decentralized Finance
With the continuous innovation of technology and applications, DeFi is developing towards a deep integration with traditional finance. The tokenization of real-world assets (RWA) has become a new hotspot, expected to introduce a massive influx of assets and users into DeFi. In the future, DeFi will further expand the boundaries of financial services and build a new financial ecosystem that integrates on-chain and off-chain.