Transactions in the field of DeFi (decentralized finance) have always attracted much attention, but is the virtual currency indispensable? This article will explore the key elements of DeFi transactions. From the perspective of virtual currency, it will introduce in depth the preparations before conducting DeFi transactions, and take you to a deep understanding of the essence of this emerging field.

Before conducting DeFi transactions, the first thing to be clear is the role of virtual currency in it. As the base currency of DeFi transactions, virtual currency plays a vital role. Virtual currencies represented by Ethereum not only serve as the operating fuel of DeFi applications, but also as a link between users and the decentralized financial world. The use of virtual currency ensures the transparency and security of transactions and lays a solid foundation for the development of the DeFi ecosystem.

In addition to the importance of virtual currency, the preparations before conducting DeFi transactions are also crucial. First of all, users need to understand and choose a DeFi platform that suits their needs. Different DeFi platforms provide financial products and services with their own characteristics. Users should choose according to their own investment needs and risk preferences. Secondly, ensuring the security of private keys is also an important link that cannot be ignored. Private keys are the identity credentials of users in DeFi transactions. Once leaked, they will face the risk of asset security. Therefore, it is crucial to properly keep private keys and choose a reliable wallet platform.

Before conducting Defi transactions, users also need to understand the operating principles of smart contracts. Smart contracts are the core mechanism of Defi transactions, which achieve transparent and efficient transactions by automatically executing contract codes. Users need to understand the writing method and execution logic of smart contracts to ensure the smooth progress of transactions. In addition, understanding the operation of liquidity mining and income pools is also the key to conducting Defi transactions. By providing liquidity to participate in mining, users can obtain corresponding benefits, but they also need to pay attention to market risks and liquidity management.

With the continuous development of the Defi market, more innovative financial products and services continue to emerge. When conducting Defi transactions, users also need to continue to learn and follow up market dynamics to cope with fierce competition and changes. At the same time, establishing a good risk control awareness and investment strategy is also an important means to ensure asset security and obtain returns. Only by continuous learning and practice, and constantly improving one's investment skills, can one be invincible in the Defi market.

In summary, virtual currency plays an indispensable role in Defi transactions, but it is not absolutely necessary. Understanding the role of virtual currency and the preparations before conducting Defi transactions will help users better grasp the core elements of Defi transactions and achieve the goals of asset appreciation and wealth management. In the field of Defi, which is full of opportunities and challenges, continuous learning and active practice will surely bring more gains and achievements. I hope you will overcome all obstacles, forge ahead bravely, and reap a lot on the journey of Defi trading!

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

As we all know, DeFi is often placed in the field of blockchain and cryptocurrency, but it is much broader. If you want to understand the thought process that led to the development of decentralized finance, it is important to understand the current state of the financial ecosystem. Decentralized finance uses a technical decentralized model and allows financial services to be provided to anyone, anywhere, and DeFi services and applications are mostly built on public blockchains. They either replicate existing products based on common technical standards or provide innovative services customized for the DeFi ecosystem. Many investors want to know whether DeFi transactions must use virtual currency? Let the following coin circle editor introduce the preparations for DeFi transactions.

 Is virtual currency required for DeFi transactions?

DeFi transactions must use virtual currency, but different chains need to buy different coins, just like Ethereum tokens on Ethereum and corresponding tokens on BscScan. You need to buy the corresponding coin according to this chain, and then pay attention to choosing the corresponding wallet. The selected wallet must support the currency you buy.

You should know that DeFi is an open global financial system built for the Internet era-it is an alternative to a system that is opaque, strictly controlled, and combined with decades-old infrastructure and processes. It allows you to control and understand your funds. It gives you access to global markets and alternatives to your local currency or banking options. DeFi products open up financial services to anyone with an internet connection, and they are primarily owned and maintained by users. So far, tens of billions of dollars worth of cryptocurrencies have flowed through DeFi applications, and it's growing every day.

DeFi is a general term for financial products and services that are accessible to anyone who can use Ethereum - anyone with an internet connection. With DeFi, the market is always open, and no central authority can block payments or deny you access to anything. Services that used to run slowly and have the risk of human error are now automated and safer because they are handled by code that anyone can check and review.

 Introduction to DeFi trading preparations

First prepare a wallet, then buy coins and recharge them into the wallet, then choose the project you want to participate in, and connect to the project with the wallet (note: different projects require different coins, mainly depending on which chain they belong to)

1. Build a wallet first, you can use Metamask, which is universal and everyone will use it. Metamask wallets are very convenient, but some people also like to use exchange wallets. Currently, the only exchange that provides Defi services that I know of is Coinbase, and the Defi circle is ten times faster than the currency circle. Some people joke that traditional finance has remained the same for ten years, with little change in ten years. Fintech is a little faster, and the cryptocurrency world is much faster than fintech, so there is a saying that "one day in the cryptocurrency world is one year in the human world". After Defi came in, the cryptocurrency world became the classical cryptocurrency world, and Defi changes faster.

The Defi wallet stores encrypted assets, which is not the core. The core is self-management or custody, whether to hand it over to others or manage it yourself. The advantage of the Defi wallet is that it is self-managed and safer. What if it is placed in an exchange and is hacked? If it is lost in a bank, there is usually compensation, but if the exchange is hacked, there is generally no compensation. From the perspective of convenience, it is more convenient to place it in an exchange, but the security is relatively poor.

2. Recharge, you need to recharge from other wallets. Generally, ETH is the most used. You can also recharge USDC or USDT. Why do we use the DAI stablecoin in Defi more instead of USDT? Because everyone is not confident about USDT. The emergence of stablecoins is due to the excessive volatility of digital currencies. The reason why digital currencies are used is that legal currencies have been inflated, over-issued, unrestricted, depreciated, and restricted by national borders. So because fiat currency has so many shortcomings, there is digital currency, and digital currency is too volatile, so there is a stable currency, and the reserve of stable currency is insufficient. It is said to be one-to-one anchored to the US dollar, but there is no sufficient audit and it is not transparent, so everyone is not confident about USDT, so they have to make a stable currency DAI in Defi.

3. Choose the method and project you want to participate in. For example, you want to invest, borrow, manage finances, buy insurance, and trade derivatives. What you also need to pay attention to is that different projects need to buy different coins, just like what I said above, it mainly depends on which chain it belongs to.

After choosing that website and opening it, you will be asked if you want to connect your wallet. If you connect it, you will generally be asked to lock your position. Lending is the most primitive financial activity of human beings. There is lending service when there is finance. Lending is also the largest product of Defi. In the past, borrowing could only be done from banks. New consumer loans, P2P, and online loans came out, but P2P has been wiped out and has been subject to many policy restrictions. The judicial upper limit of the interest rate of private lending has been reduced from 24% recognized by the court to 15.4%, which is also difficult to do.

The above content is the answer of the editor of Biquanqun to the question of whether virtual currency is required for DeFi transactions, as well as the introduction of preparations for DeFi transactions. DeFi challenges the centralized financial system by removing the power of middlemen and empowering ordinary people through peer-to-peer transactions. As an emerging phenomenon, DeFi is also accompanied by various risks. As a recent innovation, it has not yet passed the long-term or widely used stress test of decentralized finance. In addition, national authorities are working harder to study its original system and focus on regulatory tools. Now in the absence of rules and regulations, Defi is booming, and users may have little way to protect their rights.