❓FAQs?
1/ What is Layer2?
Layer 2 refers to a layer in the architecture of a blockchain that is built on top of the base layer, or Layer 1. It is designed to improve the scalability and performance of the blockchain by enabling off-chain transactions and data storage.
Layer 2 solutions aim to address the limitations of Layer 1 blockchains, which can be slow and expensive due to the need to process and confirm every transaction on the network. By moving some of the transactions and data storage off-chain, Layer 2 solutions can potentially reduce the burden on the base layer and improve the speed and cost of transactions.
There are several different types of Layer 2 solutions, including payment channels, sidechains, and state channels. These solutions use various techniques to enable off-chain transactions and data storage, such as using smart contracts or multisignature addresses to facilitate transactions and secure data.
Layer 2 solutions are an important area of development in the blockchain space, as they have the potential to significantly improve the scalability and usability of blockchains. However, they also come with their own set of challenges and trade-offs, and their implementation and adoption can vary depending on the specific needs and goals of a particular blockchain network.
https://academy.binance.com/en/glossary/layer-2
2/ What is Perpetual Trading?
Perpetual trading, also known as perpetual swaps or perpetual contracts, is a type of derivative financial product that allows traders to speculate on the price of an underlying asset without an expiry date. These contracts have features that are similar to futures contracts, but they do not have a fixed expiry date or settlement date. Instead, they are designed to be held indefinitely, with the investor making periodic payments to maintain their position.
This allows traders to take advantage of price movements on a continuous basis, rather than being limited to the expiry of a traditional futures contract. Perpetual trading is commonly used in the cryptocurrency market, where it is often offered by decentralized exchanges (DEXs) as a way for traders to speculate on the price of various digital assets.
https://academy.binance.com/en/articles/what-are-perpetual-futures-contracts
3/ Transformation of Industry
Web 1.0, Web 2.0, Web 3.0
The financial service industry is accelerating the adoption of Web 3.0.
| Web1.0 The Hypertext Web | Web2.0 The Social Web | Web3.0 The Semantic Web |
Features | Read-only and Static Web | Interactive, read and write | intelligent and decentralised |
Use cases | Content and information publishing | Social Media, Microblogs content hosting, podcasts | DeFi, tokenization of asset, online gaming, distributed ledgers, NFT, CBDC, P2P transfer |
Examples | CNN, BBC | Amazon, Apple, Meta, Microsoft, Twitter, Google, Tik Tok | Amazon Alexa, Wolfram Alpha, Apple’s Siri |
4/ Web 3.0 and Evolving Landscape
Change the existing narrative by introducing blockchain technology and artificial intelligence into the play.
5/ Blockchain and Decentralization
Provide the assurance of cryptographic security for user data.
Help in encouraging communication between software and browser plugins.
Leverage blockchain technologies to ensure transparency in the ecosystem, thereby providing better scope for audits and security.
6/ Why DeFi is an Important Trend in Web 3.0?
Decentralized finance on blockchain as part of Web 3.0 Today, we see DeFi not just mirroring traditional finance, but going beyond what is currently offered.
7/ Life Before Decentralized Finance
DeFi | Traditional Finance |
You hold your money | Your money is held by companies |
You control where your money goes and how it's spent | You have to trust companies not to mismanage your money like lend to risky borrowers |
Transfers of funds happen in minutes | Payments can take days due to manual processes |
Transaction activity is pseudonymous | Financial activity is tightly coupled with your identity |
DeFi is open to anyone | You must apply to use financial services |
The markets are always open | Markets close because employees need breaks |
Its built on transparency-anyone can look at a product's data and inspect how the system works | Financial institutions are closed books: you can't ask to see their loan history a record of their managed assets and so on |
8/ The Rapid Rise of DeFi
DeFi has grown at an impressive pace since the summer of 2020.
DeFi really took off in 2020.
1 BILLION DOLLARS
The total value locked (TVL) into DeFi projects sat at about $1 billion worth of cryptocurrency deposited in DeFi applications.
50 BILLION DOLLARS
The TVL figure exceeds the $50 billion mark. Peaked at over $181 billion in Dec
2021, according to data from DeFi Llama.
9/ So how does DeFi conform to the principles of Web 3.0?
Non-custodial
Non-custodial means the decentralized applications you interact with don’t control your data – only you do.
Open
Unlike in the traditional financial system, anyone is able to gain access. There are no gatekeepers who work to find reasons to disenfranchise people or limits on how much and where you can send assets.
Transparent
Any transaction is traceable and can be inspected by anyone, with code for applications used to perform financial operations being open-source.
Decentralized
Transactions are verified by nodes, computers around the globe running the blockchain’s software. This ensures that one centralized party cannot gain control.
10/ In the DeFi sphere,Dapps are becoming more sophisticated and reaching into new areas.
Here are some of the popular types of applications.
Decentralized exchanges (DEXs): DEXs are a hot type of online exchanges which connects users directly so they can trade cryptocurrencies with one another without trusting an intermediary with their money, whether U.S. dollars for bitcoin or ether for BTC.
Lending platforms: These platforms use smart contracts to replace intermediaries such as banks that manage lending in the middle.
Derivatives – futures and options exchanges built on decentralized exchanges are the next big thing.
Prediction markets: The goal of DeFi versions of prediction markets is to offer the same functionality but without intermediaries.
11/ Binance Smart Chain
In 2020, Binance Smart Chain (BSC) was introduced to the world. BSC was born in time for the DeFi revolution.
Advantages of Binance Smart Chain(BSC)
Transaction Speed
One of the fastest smart contract platforms.
Generate a Block
in three seconds, 4X faster than Ethereum’s 13 seconds.
Low Gas Fees
Costs an average of 5 Gwei, 8x cheaper than Ethereum.
Cross-Chain Compatibility
Increases token liquidity, utility, and value.
EVM-Compatibility
it’s faster and cheaper to run dApps on BSC.
Credible Platform
An important role in the PoSA consensus by vetting all validators on the network, ensuring that the blockchain is secure and reliable.
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