❓FAQs

What is DEX?

DEX refers to Decentralized Exchange, one of the most promising applications of DeFi. Basically, in a decentralized cryptocurrency exchange, a DEX could operate without a physical location. It works as a peer-to-peer network running on smart contracts that enable users to trade directly with each other. In addition, decentralized exchanges don’t have to comply with strict rules and regulations like in the case of centralized exchanges.

What do you mean by staking?

Staking is basically the process of depositing a cryptocurrency token or coin in a yield farming project or protocol. The individuals are putting up the stake aim at obtaining interest on their deposits in such yield farming projects as well as offerings. DeFi can help in ensuring better rewards, albeit with slightly higher risks calling for earlier investor participation.

Can you define TVL?

TVL is also an important topic for DeFi questions to ask in an interview. TVL refers to the Total Value Locked in a smart contract or set of smart contracts which you can deploy or store at one or multiple markets or exchanges. TVL serves as a promising indicator of investor deposits. In simple words, it can be defined as the dollar value of all coins or tokens combined and locked in a yield farming program, lending program, platform, insurance liquidity pool, and protocol.

Do you know about yield farming?

Yield farming is defined as the process of manual or automatic lending or arbitrage for digital assets to offer an ROI for depositing or lending digital assets in DeFi or CeFi. Yield farming is a reliable instrument for achieving additional income streams without depending on improvement of potential growth in the value of underlying assets. DeFi options are likely to offer better yields in comparison to CeFi alternatives.