Complete DeFi and Web3 Guide for Beginners


What is DeFi?

DeFi is the general name given to decentralized financial transactions consisting of the words decentralized and finance. DeFi is the name given to financial structures that are not dependent on any center or authority.


Systems that are decentralized and lack decision-making authorities, such as Bitcoin and Ethereum, are ideal examples of DeFi. However, since financial instruments are not limited to sending and receiving money, it would be correct to bring to mind more advanced financial functions when DeFi is mentioned. These include borrowing, lending, decentralized stock market, insurance, shopping, marketplace, and the like. For those who enable such more advanced features, Compound (COMP), Kyber Network (KNC), 0x (ZRX), Bancor (BNT), Synthetix Network Token (SNX), Maker (MKR), Uniswap (UNI) and Aave, which have tokens on our exchange (LEND) can be counted.


DeFi structures must-have elements that somehow reassure their users. Although a decentralized structure sounds interesting, it can also be used for malicious purposes. Bitcoin DeFi structure is secured with an unbreakable and unchangeable mathematical formula.


All DeFi systems must have a cause-and-effect relationship. The transactions that can be made are clear and it is clear under which conditions and which transactions will be made. Therefore, smart contracts, decentralized applications, and consensus protocols have an important place in DeFi systems.


For What Purpose Did DeFi Emerge?

DeFi was launched to build a more democratic financial system after cryptocurrencies emerged for freedom. Another most important purpose of DeFi systems is to enable people who do not have access to traditional financial systems to do their financial work.


About 1.7 billion people around the world do not have access to the traditional financial system, namely banking transactions. DeFi systems aim to reach these people, whom the current financial system cannot reach.


Although there are physical barriers to accessing banking systems, people's distrust of the central banks is important.


What is the DeFi Difference?

DeFi ensures that people who cannot trust the bank can perform their banking transactions not by an authority, but through an algorithm created by the system. It allows you to be done with a certain formula with millions of devices connected to DeFi networks. For this reason, a center can't intervene in DeFi systems. Users of the system also ensure that the system can work.


The advantages aspects of DeFi systems in general are:

It led to the emergence of decentralized exchanges.

It has enabled the use of money-based banking systems by everyone.

It has enabled users to borrow and lend transactions between users.

It enabled the introduction of a new cryptocurrency to the market and the ability to raise funds for projects.

It has enabled newly available finance tools to be made available with DeFi.


What is the Advantage of DeFi Systems?

After the 2008 crisis in the world, many people felt distrust towards banks and state central banks. The dominance of a center in all financial instruments, monetary policies, and a system that even banks could lose at any time was highly criticized.


The fact that governments can print unlimited money and change valuations has increased people's interest in systems where no one can interfere with a certain formula.


Bitcoin has become the most important asset to emerge in this field. It was a decentralized DeFi organization, where thousands of people could be both using and managing it.


With blockchain, where there is no need for a central authority, the field of finance has become more liberal. Users can keep their assets and send them to someone else without an intermediary, with a privacy policy.


What Are the Disadvantages of DeFi?

In many ways, DeFi will radically change the traditional understanding of finance. Being at the very beginning of this change causes there to be still open spaces in some areas of this system.


DeFi systems currently have two aspects that may be missing. Although it aims to be used all over the world, the number of people using DeFi is very small at the moment.


As a second problem, so many transactions have to be stored as data in some way. There is not an adequate infrastructure for the storage of these data.


Evolution of the Internet from WEB 1.0 to WEB 4.0

From the 1980s, when personal computers entered our lives, to the 1990s, when the internet began to be widely used, and until today, many developments and changes have occurred in the internet and related technologies. At the beginning of the 2000s, the internet, to which we were connected limitedly with floppy disks (floppy disks), 56k modems, with one-way communication, where we could only browse and get content and information, is an indispensable part of our lives today and we are in an endless interaction with each other without borders. became.


In particular, with the use of the features offered by internet connections for the last 20 years, rapid advances have been made in web technologies in all areas of our lives, from social life to education, from communication to commerce, enabling web developers to create new generation, useful and comprehensive web experiences.


While the number of internet users is increasing day by day, the web and the internet have been redesigned and changed to accommodate different users and different devices over the years. Depending on the recorded technological developments, different internet periods such as Web 1.0, Web 2.0, Web 3.0, and Web 4.0 have emerged until today.


Let's take a look at this brief evolution of the web;


WEB 1.0 ( 1990 – 2000 )

Known as the first and most primitive period of the Internet, the Web 1.0 period can also be defined as the period in which the user only observes the Internet and cannot create their content. In this period, which experts define as the "read-only web", the internet was used almost like an online library consisting of fixed content and a one-way information flow. The role of the average internet user was limited to reading the information presented to him. In this period when HTML-based company web pages were common, the user did not have the authority to add or comment on any content.


WEB 2.0 ( 2000 – 2010 )

Web 2.0 is the second era in which the web has become popular with its user-centered and collaborative environment. In this period, a dynamic and two-way connection platform, where users participate in content production and shares, has emerged. This term is also known as the “social web” because users not only read websites but also interact and connect with other users socially.


In this period, websites and applications such as weblog (blog) sites, Facebook, Twitter, YouTube, Instagram, and Wikipedia, have features and functions where social media comes to the fore, accessing information, organizing information, and sharing information is at the forefront. Internet users were able to easily share video, visual, and information content by using interactive tools.


As a result of efforts to meet socialization needs, ready-made admin panels and databases that do not require technical knowledge were offered to users, programming languages ​​such as ASP.NET, PHP, technologies, and applications such as SOA, RSS, API, AJAX, XML for dynamic websites were widely used in this period. started.


WEB 3.0 ( 2010 – 2020 )

Web 3.0, which is defined as "making sense of the contents transferred to the virtual world with the Web 2.0 revolution"; points to a web environment where the control of the internet is out of the hands of humans, data is structured and labeled in a way that can be read directly by computers, interpreted with software solutions such as artificial intelligence approaches and techniques and made "intelligent". For this reason, this period can also be defined as the "semantic web" period or the period when machine learning developed. The data collected with semantic web technology is used by users and reaches a structure that computers can make sense of.


Web 3.0 has revolutionized the world of advertising and marketing and has led to the emergence of personalized content. Thanks to advanced algorithms and database systems that communicate with each other, users can be informed about the place they previously visited, the place they shopped, the page they liked, etc., according to their preferences and interests. Suggestions, advertisements, and similar results related to the criteria are displayed as personalized. Structures such as suggestion systems used in web applications, face recognition and tagging in photos uploaded with image processing technology, video intelligence applications, and integrated assistant applications that work to provide users with a better user experience can be considered indicators of the Web 3.0 era.


WEB 4.0 ( 2020 – 2030 )

Web 4.0, where internet-based computing (cloud computing) applications stand out in the storage of personal files, data, and content, everything from the operating system to all applications is separated from physical disks.


Artificial intelligence and augmented reality technology come to the fore in Web 4.0 technology. From computers as personal assistants to virtual realities, holograms, connecting all home appliances to the internet (internet of things), an internet form in which there will be extremely intelligent interactions between machines and people, and the machines will reach the highest quality results with the highest performance by reaching the level of intelligence that can interpret and make sense of the content on the internet. means. For this reason, this period is also called the "symbiotic web" or "smart web" era. Thanks to artificial intelligence algorithms that can think like humans, the relationship between the web and users becomes more personalized.


With Web 4.0, users can use the programs in the operating system installed on the web from anywhere in the world via the cloud, without the need for programs installed on computers. To use Web 4.0 technologies efficiently, a high-speed internet connection is required. It is envisaged that a web architecture with 100 Gigabits per second connection speed and bandwidth is required.


Web 3.0's relevance to the Metaverse

On a closer look, Metaverse and Web 3.0 are quite relevant entities. Web 3.0 will be an infrastructure for Metaverse. VR devises to be used for Metaverse can accelerate the transition to Web 3.0. This process can be easily achieved if an open-source system, a reliable infrastructure, and verifiable communication methods are provided. Both formations are the future of the internet world.


Reviews of Web 3

The main criticism brought to Web 3 technology is that it lags behind its ideals. Ownership over blockchain networks is not evenly distributed but concentrated in the hands of early adopters and venture capitalists.


Central to the criticism is the notion that blockchain projects are “decentralized” in essence, not so-called. Private blockchains, venture capitalist-backed investments, or decentralized finance (DeFi) protocols, where just a few people hold the keys to hundreds of millions of dollars, are all examples of a 'decentralization' spectacle.


Despite the so-called leaderless community of protocols, there are clear leader figures. Former editor of FT blog Alphaville, Izabella Kaminska, noted the enormous power that Ethereum co-founder Vitalik Buterin continues to have on the network, although he is no longer involved in its development. Speaking to The Crypto Syllabus, Kaminska said, “Vitalik is a funny and contradictory phenomenon in itself. He operates as the spiritual leader of a de facto headless system while wielding incredible dominance and influence over the headless system he has created and controlled.” said.


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