TheStandard Protocol
HomepageOpen Dapp
  • Introduction
    • What is TheStandard?
    • Vision Statement
    • What is DeFi?
    • Key Benefits
    • USDs & EUROs
    • Collateral Types
    • ❕Important links and addresses
    • Disclaimer
  • Getting Started
    • ⭐Quick Start Guide
    • Connecting Your Wallet
    • Understanding Smart Vaults
    • Supported Assets
    • Cross chain DEX How-to
  • Core Concepts
    • Borrowing Process
    • Staking TST and USDs
    • Liquidity and Peg Stability
    • DeFi and Liquidity Pools Explained
  • Borrowing USDs / EUROs
    • How to Deposit Collateral
    • Collateralization Ratio
    • Managing Your Debt
  • Yield Generation
    • Stable Pools vs. Volatile Pools
    • Impermanent Loss
    • Optimizing Your Yield
  • TST Token and Staking
    • What is TST?
    • How to Stake TST
    • Staking Rewards and Benefits
  • Governance and DAO
    • The Role of the DAO
    • How Voting Works
    • Submitting Proposals
  • Security and Risk Management
    • Audits and Safety Measures
    • All About Liquidation
  • Roadmap and Future
    • Upcoming Features
  • Additional Resources
    • Press Kit
    • Troubleshooting Guide
    • Frequently Asked Questions
    • Community Resources
    • Developer Documentation
    • What is Arbitrum one?
      • ➕Adding Arbitrum one
      • Bridging crypto to Arbitrum
    • ⚖️Understanding Stablecoins
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  1. Core Concepts

DeFi and Liquidity Pools Explained

An educational section that introduces users to DeFi, liquidity pools, and their importance.

In the evolving landscape of finance, Decentralized Finance (DeFi) emerges as a revolutionary force, dismantling traditional financial barriers and offering an array of services directly on the blockchain. Central to the operations of DeFi are liquidity pools, mechanisms designed to foster a seamless trading, lending, and borrowing environment without the need for conventional intermediaries like banks.

The Essence of DeFi

DeFi, or Decentralized Finance, is a term that encapsulates various financial activities conducted on blockchain technology, aiming to decentralize access to financial services. By leveraging smart contracts on blockchains, primarily Ethereum, DeFi platforms enable users to lend, borrow, trade, and earn interest on their cryptocurrency holdings in a trustless manner, eliminating the need for traditional financial intermediaries.

Liquidity Pools Unveiled

At the core of many DeFi protocols are liquidity pools, which are tokens locked in a smart contract. These pools provide the liquidity necessary for the ecosystem, enabling token swaps, loans, and yield farming activities. Liquidity pools are pivotal because they allow decentralized trading, ensuring users can exchange tokens anytime without depending on a counterparty. Users who deposit their tokens into these pools, known as liquidity providers (LPs), earn fees generated from the trades executed against the liquidity they've provided, proportional to their stake in the pool.

TheStandard's Innovation in DeFi

TheStandard.io introduces a novel approach to DeFi borrowing, allowing users to earn an interest on collateral and then mint debt against those collateralized assets. This platform eliminates the traditional borrower-lender dynamic, allowing users to leverage their assets without relinquishing control. With a focus on over-collateralization, TheStandard.io ensures a secure and flexible borrowing experience.

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Last updated 7 months ago