Decentralized Finance found its origins as a movement for leveraging decentralized networks to enable the transformation of conventional financial products and instruments into transparent and trustless protocols. Therefore, the interest in DeFi has been increasing profoundly as it can provide a lot of improvements. For example, DeFi could enable financial products and solutions which can function without intermediaries with the assurance of transparency. 

Therefore, institutional investors, national and regional governments alongside individual consumers are interested in becoming DeFi experts for leveraging these benefits. However, the question is ‘How can I become an expert in DeFi?’ and you have arrived at the right place for your answers. The following discussion offers a detailed overview of the information you need to become DeFi expert.

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Learn the Concept behind DeFi

One of the first steps in your journey to become a pro in DeFi would refer to the development of a comprehensive understanding of DeFi itself. You might take a look at any general definition of decentralized finance (DeFi) and think that it is enough to get started with Defi. However, an expert always aims at developing a thorough understanding of the domain of DeFi before diving into it. Decentralized finance basically refers to a new take on finance that focuses on the removal of intermediaries. In addition to this, you have to note that the objective of DeFi also focuses on the creation of a financial ecosystem with the following traits,

  • Open-source
  • Decentralized 
  • Transparent
  • Permissionless

It is also important for a DeFi professional to understand the functionalities of the DeFi ecosystem. The lack of intermediaries suggests that DeFi is accessible to almost anyone. Therefore, DeFi could enable people for exercising complete control over their assets. In addition, it also helps in conducting peer-to-peer transactions as well as exchanges alongside supporting the development and utilization of decentralized apps

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Check out the below Infographic to understand the DeFi ecosystem in detail-

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Know the Driving Force behind DeFi

The next critical aspect to the answer for ‘how to become DeFi expert’ would refer to the identification of the technology behind DeFi. Decentralized finance (DeFi) leverages blockchain technology for offering financial services just like banks, brokerage firms, insurance firms, and exchanges. With the help of blockchain technology, DeFi could bring many value advantages in financial services such as,

  • Peer-to-peer borrowing and lending transactions
  • Flexible cryptocurrency trading opportunities
  • Improved insurance against risks
  • Prospects for earning higher interests
  • Accurate tracking of the price fluctuations for assets

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In order to become a DeFi expert, you should also understand the advantages it brings to the table. Since DeFi is based on blockchain technology, it also offers the benefits of blockchain such as immutability, interoperability, and transparency. Most important of all, it also ensures that there is no single point of failure, thereby preventing any concerns of censorship or shutdown of DeFi services. Let us take a detailed overview of the value advantages of DeFi which play a crucial role in driving their popularity. 

  • Immutability

Immutability is one of the basic traits of blockchain technology. It basically implies that it is impossible to modify data on a blockchain. Therefore, all the information is tamperproof in blockchain-based DeFi solutions. As a result, DeFi ensures higher security and better flexibility for audit in financial procedures and operations. 

  • Interoperability

A DeFi professional should also have awareness of the interoperability benefits with decentralized finance applications. DeFi can allow developers for developing over existing protocols alongside customizing interfaces and integrating third-party applications. Therefore, it is essential to perceive the identity of DeFi protocols as ‘Money Legos’ which allow you to develop new DeFi solutions by combining other DeFi solutions. For example, decentralized exchanges, prediction markets, and decentralized exchanges could be combined in DeFi for creating advanced marketplaces. 

  • Transparency

Another critical factor about DeFi which every aspiring professional should learn about is transparency in DeFi. The visibility of all transactions, codes, and data on the blockchain to everyone opens up new opportunities for trust. The benefits of transparency can ensure that people in the network are aware of the type of transactions. In addition, DeFi could also enable users to look at the smart contract code and associated functionality. As a result, DeFi could offer the assurance of authenticity, security as well as auditability. 

  • No Single Point of Failure

The most important trait of DeFi which every DeFi specialist should understand is the lack of a centralized point of failure. Decentralized finance runs on blockchain technology thereby implying the storage of all the information on the blockchain. In addition, all the information related to financial services is shared across multiple nodes in the network. As a result, there is no specific point of failure in the network. With data on different nodes, DeFi could ensure improved censorship resistance. Users can enjoy complete control over their assets and money in a DeFi network alongside the benefits of fast and low-cost transactions. 

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Understand the Use Cases for DeFi in Various Industries

If you are aspiring to become a pro in DeFi, then you should also understand the different use cases of DeFi. The use cases showcase the feasibility of implementing DeFi for ensuring easier, faster, and more convenient workflows. Here is an overview of some of the notable use cases of DeFi which can help you expand your knowledge of DeFi.

  • Data and Analytics

Even though this might come as a surprise, DeFi protocols could ensure improved data discovery, analysis alongside decision making. With transparent access to all network activity and transaction data, DeFi protocols can help in using the true potential of data for financial and risk management. The continuous growth in the number of new DeFi applications has resulted in the introduction of various tools as well as dashboards. 

  • Banking Services

Since DeFi basically focuses on the financial sector, it would have a major impact on banking services. Knowledge of the potential drivers of use cases of DeFi in banking services is one of the answers for ‘how to become DeFi expert’. The blockchain serves as the foundation for secure and direct exchange of cryptocurrencies, by excluding intermediaries. DeFi could also bring a completely new, open, accessible, and easy-to-use banking system with various benefits. For example, DeFi could help in streamlining the market infrastructure for payment services. At the same time, financial institutions could also discover efficient approaches for the service of wholesale and retail customers.

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Steps to Become a DeFi Expert

The understanding of the fundamental underpinnings of DeFi alongside the different value advantages it offers can offer a good start to your journey of becoming a DeFi specialist. However, you need to have a clear impression of the steps ahead in the journey. Here are some of the important steps you can follow for becoming an expert in DeFi.

  • Learn How to Develop DeFi

The “easiest” approach for becoming a professional in DeFi for a beginner would be to learn DeFi development. What could be a better way of learning DeFi than developing a DeFi solution? So, you should have the necessary skills of a developer which can help you become a DeFi expert. The important skills for a DeFi developer include knowledge of smart contracts, ERC-20 tokens, and the Solidity programming language. Discover your way around the concepts of DeFi by incorporating them in dummy projects. As you practice regularly with smart contracts and decentralized apps, you can master the domain of DeFi with ease. 

  • Improve Your Business Understanding

One of the foremost aspects which you need to become pro in DeFi is a strong understanding of financial services. Without an idea about what you are building and what it will achieve, you cannot achieve desired value with DeFi. So, it is important to hone your knowledge of concepts in banking and finance for strengthening your command over DeFi. DeFi experts can utilize their knowledge of banking and finance for identifying opportunities and risks in developing specific DeFi projects

  • Training and Certification

The final and most commonly recommended pointer for any aspiring DeFi expert is training and certification. You need to select reliable training course providers for covering the fundamentals of DeFi, DeFi protocols, and using blockchain for developing DeFi solutions. In addition, you could also look for certifications to prove your mettle in DeFi. Since DeFi is a continuously evolving sphere, it offers multiple prospects for learning and development for all types of professionals. So, you have to recognize the suitable platforms which can guide you on your journey to expertise in DeFi.

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Bottom Line

Without any doubt, Decentralized Finance is expanding at a staggering speed and opening up many career opportunities. However, it is also important for an aspiring candidate to understand ‘how to become DeFi expert’. Beginners can start with fundamental concepts of DeFi although with an in-depth reflection on various aspects of DeFi. The objectives and vision of DeFi can help you understand what it is actually meant to do and the changes it will bring. At the same time, understanding the value advantages of DeFi can help a professional learn how to leverage DeFi in the best way possible. Most important of all, you should be ready for training and practice if you want to become an expert in DeFi. 

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!