Decentralized Finance Overview: Core Zones, Application Scenarios, and Stablecoin Mechanisms Analysis

2025-08-03 08:47:02

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Decentralized Finance Overview: Core Concepts, Application Scenarios, and Operational Mechanisms

Decentralized Finance ( DeFi ) is a new type of financial system built using blockchain and smart contract technology. It features transaction transparency, automated execution, low costs, and openness, which are fundamentally different from traditional centralized finance.

The DeFi ecosystem covers multiple core sectors, including stablecoins, lending protocols, cross-chain bridges, liquid staking, decentralized exchanges, tokenization of real-world assets, etc. Some of the more common application scenarios include:

Staking tokens to participate in POS consensus: Investors delegate tokens to validation nodes and share block rewards.
Provide loans: Investors deposit idle funds into the lending pool to provide capital for borrowers and earn interest.
Provide trading liquidity: Provide funds on decentralized exchanges to earn a share of the trading fees.
Use Yield Aggregators: Automatically allocate funds to high-yield projects through smart contracts.
Lock tokens to participate in governance: Lock project tokens to gain governance rights and rewards.

Stablecoins are an important infrastructure in the Decentralized Finance ecosystem, mainly divided into four categories:

Fiat-backed: such as USDT, USDC, supported by fiat currency reserves
Product endorsement type: such as XAUT, backed by physical assets
Over-collateralized: like DAI, over-collateralized by crypto assets
Algorithmic: Such as UST, adjusts supply and demand through algorithms to maintain stability.

Decentralized exchanges generally adopt the Automated Market Maker ( AMM ) model. Uniswap uses the constant product formula x*y=k to achieve automated trading without the need for a counterparty. Curve innovatively employs a hybrid curve to ensure liquidity while reducing slippage and impermanent loss.

In 2025, the tokenization of real-world assets ( RWA ) will become a new focus in Decentralized Finance (DeFi). It will bring traditional assets on-chain, providing DeFi with incremental assets and users, marking that DeFi is moving towards broader application scenarios.

DEFI-7.72%

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