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PanCakeFi
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DeFi 2.0 collectible NFT ecosystem focused on incubating Metaverse and Web3 unicorns
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📚📚WHAT IS DEFI 1.0?

🔎DeFi stands for ""decentralized finance,"" a type of finance that is regulated by the community supporting DeFi crypto initiatives rather than by central authority.

🌿There is no clear definition of 'DeFi 1.0,' however it typically refers to traditional DeFi protocols introduced in 2020 or earlier.

💧Instead of going to a centralized bank to acquire a loan, you would go to a dApp (a decentralized application, or simply - a DeFi project) that specializes in loans and borrow money from there. This money would be provided to you by the project's community, and you would be able to engage with the dApp anonymously. Everything would be regulated by smart contracts, which eliminates the possibility of human mistake or a single person's judgment.

☣️Liquidity pools are a critical component of DeFi that you should be aware with. A liquidity pool is a repository for all cryptocurrency tokens that may be exchanged and are offered by liquidity providers. A liquidity pool enables a project to attract additional liquidity providers, who will then put in two sorts of tokens: a project token and some sort of leverage, such as Ethereum or DAI.

🖼However, there is a major issue with DeFi 1.0 that has to be addressed by developers and investors, but we'll keep that for another time!

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🖼🖼DeFi 1.0 projects' only chance of keeping their investors over the long term is to strive to make a great and alluring project. Investors would then be encouraged to continue investing on the platform even after the first liquidity mining phase has ended.

☪️But as you can undoubtedly guess, coming up with an original and ground-breaking initiative isn't always simple. Traditional, DeFi 1.0 projects struggle to keep long-term investors, thus some crypto enthusiasts have come up with really creative and fascinating solutions to get around this problem entirely.

☣️This selection brings us to DeFi 2.0.

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📒Liquidity pools are one of the main components of DeFi and the second important concept you should be aware with in this part. A liquidity pool is a location where all of the cryptocurrency tokens that are offered by liquidity providers, or the DeFi community, and are available for trading, are kept.
Using a liquidity pool, a project may draw in additional liquidity providers, or investors, who will then contribute two sorts of tokens: the project token and some form of leverage, like Ethereum or DAI.

📈Investors get passive income on the trading fees that these users pay when more users join the liquidity pool and trade these two tokens over time. As a result, both investors (who earn passive income) and traders (who don't need to identify a third party to execute the deal and may trade anonymously on the liquidity pool) are delighted.

🏖The traders don't really trade on the liquidity pools. Instead, the trading operations take place on Automated Market Makers (AMM), specialized platforms created to make use of liquidity pools to support such trading activities.

🎡To summarize, DeFi is a fully automated, decentralized financial ecosystem with no single owner, Automated Market Maker algorithms, and liquidity pools full of cryptocurrencies provided by liquidity providers (AKA investors and initial project owners).

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🕌The liquidity pool would theoretically never run out of products since every time a transaction occurs, customers send new products in exchange for old ones. Based on the supply and demand for items as well as the actual amounts of the goods in its own pool, the shop's pre-programmed trading procedures automatically update the pricing and exchange value ratio.

Teams on conventional DeFi projects frequently contribute a large amount of their native token to the liquidity pool in the hopes that this would draw in further investors. It frequently succeeds over time because investors join and add their own coins and tokens to the pool, and when they begin to receive passive returns, the pool gains popularity.

But this is where the real problem arises: if a DeFi project depends on the liquidity pool money of investors to exist, it runs the danger of extreme token price fluctuation and overall unpredictability.

🥑Consider it this way: If you have no interest in a project and are simply investing to get liquidity (generate a passive income), you will likely switch to the better offer anytime you come across it (such as one that offers a greater yearly percentage return).

🥨The liquidity pool and the project it's linked to are under a lot of strain as a result of this. A significant liquidity provider reversal will thus cause a great deal of turbulence and cause the price of the project token to fluctuate significantly.


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The thing that distinguishes Olympus from the competition is the OHM token. Each OHM coin has a base price that is determined by the portfolio of cryptocurrencies that back it. To put it another way, OHM has a set price ceiling (or floor price) that, in theory, shouldn't be exceeded.

🚘Going back to OlympusDAO and DeFi 2.0, users can spend their OHM tokens for two different purposes. They can stake them in exchange for additional OHM tokens or exchange their cryptocurrencies for OHM tokens at a reduced rate.

💍Now, the DeFi 2.0 magic happens during the second procedure I outlined. The coins that are exchanged for OHM tokens when they are purchased at a discount go to OlympusDAO. Bonding is the name of this procedure.

👜The newly acquired assets, such Ethereum or the DAI stablecoin, are then used by OlympusDAO as operating capital. Olympus effectively takes on the role of liquidity holder and is able to stake the assets on other well-known liquidity pools, such Uniswap.

🧩Recall how I said the major issue with typical DeFi 1.0 systems is liquidity suppliers departing a project? In the case of Olympus, however, because it now has the liquidity, it won't ""leave itself"" because the entire liquidity is in the project's fictitious hands. In principle, this produces a reasonably secure and established cash flow and guarantees the project's long-term funding.

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🏖As previously stated, the main goal of DeFi 2.0 protocols revolves upon fixing the problems with DeFi 1.0. DeFi 2.0 would prioritize securing the survival of the DeFi movement above everything else. Liquidity in decentralized finance is supported through token incentives and third-party suppliers. DeFi is unrelated to conventional finance or the world economy at the same time.

🖼Long-term decentralized financial sustainability may suffer significantly as a result of these issues. These problems would be the main focus of DeFi 2.0 and the subsequent updates. Early DeFi 2.0 ventures like OlympusDAO provide creative approaches for guaranteeing long-term liquidity. Additionally, DeFi 2.0's protocol-controlled value procedures can aid in
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☣️But as you can undoubtedly guess, coming up with an original and ground-breaking initiative isn't always simple. Traditional, DeFi 1.0 projects struggle to keep long-term investors, thus some crypto enthusiasts have come up with really creative and fascinating solutions to get around this problem entirely.

🏉This selection brings us to DeFi 2.0. Let's use one of the most well-known DeFi 2.0 projects as an example to help you better grasp what I'm getting at.
🔮OlympusDAO is frequently regarded as DeFi 2.0's most prominently shown project. Due to its novel approach to resolving the liquidity issues of conventional DeFi initiatives, many crypto enthusiasts see OlympusDAO as the most intriguing decentralized finance experiment of our time!

♨️OlympusDAO is, in essence, a system for a decentralized reserve currency. In essence, Olympus centers all of its activities on a token called OHM. These operations cover staking, bonds, liquidity support, and other related activities.
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🔯DeFi 2.0 was clearly justified in light of the shortcomings of DeFi 1.0. At the same time,the objectives of DeFi 2.0 include encouraging information about technological advancements for fixing the issues with DeFi 1.0. But it's crucial to comprehend how DeFi 2.0 functions.What technological advancements are propelling the shift to DeFi 2.0? Here are some noteworthy products that have helped DeFi 2.0 develop.

🦚Scalability
DeFi users,especially newcomers,must overcome tremendous challenges while interacting with the Ethereum network. However, because of the lengthy wait periods and expensive gas, many consumers are unable to use DeFi services. How may this issue be solved via DeFi 2.0 protocols?One of the initial responses could mention Ethereum substitutes like BSC, Solana, or Polygon.Layer 2 scalability advantages provided by these blockchain networks may encourage the use of DeFi solutions.In actuality, scalability would be a major focus of the upcoming wave of DeFi technologies

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🔰What technological advancements are propelling the shift to DeFi 2.0? Here are some noteworthy products that have helped DeFi 2.0 develop.

🎗Centralization
DeFi has attracted a lot of attention because to the possibility of substantial income-generating options. DeFi, on the other hand, is a different option that certain users might employ to achieve financial independence and self-sufficiency. However, the current paradigm of decentralized finance solutions does not offer the same. DeFi 2.0's developments in decentralized finance would prioritize decentralization for users. Existing DeFi solutions have groups in charge of the whole protocol, raising concerns about their integrity. Recent advancements in Decentralized Autonomous Organizations, or DAOs, provide significant benefits for enhancing DeFi models. By giving users control over a protocol's governance, DAOs can address the issue of centralization.

#PanCakeFi #DAOs #DeFi
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