DeFi: Experiencing the New Financial Paradigm Firsthand

Hello, Tethermalls blog readers! Today I want to talk about “Decentralized Finance (DeFi),” a topic I’ve been deeply exploring since last year. I think this will be helpful for those who are dissatisfied with the traditional financial system or looking for new investment opportunities.

How I Got Interested in DeFi

Until a few years ago, I followed the traditional financial system without question. I kept money in bank accounts, traded stocks through securities firms, and endured cumbersome processes and high fees for international transfers. Then, during what’s called the “DeFi Summer” of 2020, I discovered DeFi and realized it wasn’t just cryptocurrency speculation but a fundamental change in finance.

My first DeFi experience was swapping Ethereum for another token on Uniswap. The experience was amazing—completing a transaction in minutes with just my wallet and a smart contract, without banks or intermediaries. The fees were also much lower than traditional financial services.

What Exactly is DeFi?

DeFi stands for “Decentralized Finance,” a new financial system built on blockchain technology. It allows you to use financial services without centralized institutions like banks, securities firms, or insurance companies.

The most important feature is “removal of intermediaries.” In traditional finance, if A wants to send money to B, a bank is needed as an intermediary. In DeFi, code called a smart contract takes that role. This code is public and, once deployed, cannot be arbitrarily changed by anyone.

Key DeFi Components I’ve Experienced

1. Stablecoins – Digital Currency Without Volatility

Stablecoins were the first thing I encountered when starting with DeFi. Tired of the extreme price volatility of Bitcoin and Ethereum, I found USDT (Tether) and USDC, which maintain a stable value of $1, to be a refreshing discovery.

Thanks to these stablecoins, which we also use in our Tethermalls service, stable value exchange is possible in cross-border transactions without worrying about exchange rates.

2. DEXs (Decentralized Exchanges) – Direct Trading Without Intermediaries

Using DEXs after submitting all my personal information to centralized exchanges and suffering from deposit/withdrawal restrictions felt truly liberating. Especially AMM (Automated Market Maker) style DEXs like Uniswap or SushiSwap were easy to adapt to with their simple user interface.

Of course, the network fee called Gas Fee can sometimes be burdensome, but I think having complete control over your assets is worth it.

3. Lending Platforms – Getting Loans and Interest Without Banks

Using lending protocols like Aave or Compound to deposit my cryptocurrencies and earn interest, or conversely, stake collateral and take out loans in other coins, was also an interesting experience.

Unlike traditional bank savings accounts with annual interest rates of 0.1%, DeFi platforms often offered interest rates of 5-10%. There are certainly risks, but being able to pursue higher returns while understanding and managing those risks was attractive.

Advantages I’ve Felt Using DeFi

Democratization of Access

The biggest reason I like DeFi is “financial democratization.” Although 1.7 billion people worldwide don’t even have bank accounts, they can access DeFi services with just a smartphone. It’s revolutionary that financial services can be used without credit scores, income verification, or complicated paperwork.

Transparency and Control

Another big advantage is that all transactions are recorded on the blockchain, ensuring transparency, and I have complete control over my assets. As the saying goes, “Not your keys, not your coins,” the experience of directly managing assets through private keys is clearly different from traditional finance.

24/7 Operation

Being able to trade anytime—weekends, holidays, day or night—is also convenient. There’s no need to wait for bank business hours for international transfers. Once I used a DeFi loan at 3 AM when I urgently needed funds; this kind of flexibility is unimaginable in traditional finance.

The Risks and Challenges of DeFi I’ve Honestly Experienced

Of course, it’s not all advantages. I’d like to honestly share the difficulties and risks I’ve experienced while using DeFi.

Smart Contract Vulnerabilities

I once lost some funds when investing in a lesser-known DeFi project that got hacked. If there are bugs in the code or security is weak, it can become a target for hackers. That’s why I now tend to use only verified projects that have undergone audits.

Limitations of User Experience

Setting up a MetaMask wallet for the first time and adjusting gas fees was quite complicated. The barrier to entry is still high for average users with limited technical knowledge. I think this is an area that services like Tethermalls should improve by providing more intuitive interfaces.

Legal Uncertainty

Different regulatory environments in each country are always a concern as a DeFi user. Since tax handling and legal status are often unclear, I always keep detailed records of transactions and stay vigilant about legal changes.

How to Use DeFi in Real Life

International Remittance and Payments

International remittance through banks required high fees and 3-5 days of processing time, but DeFi transfers using stablecoins are completed within minutes and the fees are much lower. I use this method to receive compensation when doing freelance work overseas.

P2P Transaction Protection

And this is the core value that our Tethermalls provides. Traditional escrow services had the disadvantages of high fees and slow processing times, but blockchain-based escrow greatly improves transparency and efficiency. I used Tethermalls’ escrow service when buying a used laptop, and both parties could trade with peace of mind.

Generating Passive Income

I have some of my cryptocurrency assets deposited in DeFi platforms to earn interest. Of course, I manage them by distributing across various platforms to diversify risk. The potential for higher returns compared to traditional savings is attractive.

How to Start Your DeFi Journey

If you’re also interested in DeFi, here’s how to get started:

1. Identify Your Business Needs First: Find DeFi services that match your purpose, such as international remittance, payment protection, or income generation.
2. Set Up a Secure Wallet: Set up a non-custodial wallet like MetaMask or Trust Wallet. Keeping your private keys and recovery phrase safe is most important!
3. Start with Small Amounts: Start with small amounts to understand the system and learn from mistakes. I once set gas fees incorrectly and paid more fees than necessary.
4. Join Communities: Joining DeFi communities on Reddit, Discord, etc. can provide a lot of information and help.

Conclusion: DeFi is Not Just a Trend But the Future of Finance

After using DeFi for over two years, I’m convinced that it’s not just a passing trend but a fundamental change in finance. While it’s still in the early stages with many areas for improvement, I believe the vision of increasing openness, transparency, and efficiency in finance is very valuable.

Tethermalls is also part of this change, using blockchain technology to create a safer and more transparent trading environment. Our goal is to bridge the gap so that average users can easily experience the benefits of DeFi.

Would you like to join the DeFi journey too? If you have questions or experiences, please share them in the comments. In the next post, I’ll discuss in more detail how Tethermalls’ blockchain escrow utilizes the advantages of DeFi.

Thank you!

If you have more questions about DeFi or Tethermalls services, please feel free to contact us through our official channels. Stay tuned for the next post!