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What is DeFi?
We as humans love to categorize things. We love making things black and white or putting everything in a neat category so that we can actually wrap our minds around it. And that’s exactly what was happening with Web 1.0, web 2.0 and web 3.0 and even Defi 2.0. We are basically just bundling up ideas and collectively calling them something so it’s easier to refer to them. With that in mind, let’s move on considering that defi 2.0 isn’t some magical term that’s just going to make you a bunch of money but instead simply a name to categorize a new idea currently happening in the world of decentralized finance
When it comes to cryptocurrencies, liquidity number is really important because where we actually go to buy crypto. For defi 2.0, I’m specifically referring to the liquidity that decentralized exchanges or dexes like Uniswap or Pancakeswap have. These applications use a specific algorithm called a constant product automated market maker which sounds really complicated. These dexes only have liquidity of only people give it to them. So basically, you can only go to pancake swap and actually buy safe moon if someone else has come along and actually given pancake swap their safe moon for you to trade.
Now a little technicality here. The people who actually give pancake swap their tokens technically give two tokens in a pair like safe moon and then USDC. They do this because they can earn a small…
