DeFi Basic

History of Web 3.0

History of Web 3.0

How web evolved and paved the way for the new financial world!

The internet, since its discovery, has revolutionized the computer and democratized information which is now available to all. With its humble beginnings in the late ’60s and early 70’s, when it was a connection between few computers, the internet has grown multi-folds, touching the lives of every individual today. While the next couple of decades remained steady since its inception, the actual steam to the internet’s growth engine came in the ’90s when the popularity of the internet skyrocketed, and the content moved from being more dynamic and user-controlled and oriented. As this trend made the internet famous, the ammunition for the next level is already getting ready when the internet will be more decentralized driven by artificial intelligence and 3D graphics, making it more agile, better connected, and universal. 

While the above paragraph speaks about the past, present, and future of the internet in a single go, in reality, the difference between how the internet functioned and will function is a little more complex- both in terms of the content aspect, user reach and the technical aspects. Let us dive into a little more detail to understand each version of the internet and its difference. 

Web 1.0  (1970-1990)

Web 1.0 refers to the humble beginnings of the World Wide Web. For the first few decades, the internet remained a rare commodity and was available only to the select few majorly who could afford it and were technically sound to use it. This period also had limited content creators, and a vast number of users were only content consumers. The content created during this period was pretty static and was majorly informative and less interactive. Personal and single-page web pages were pretty standard in this era hosted on ISP-run web servers or free web hosting services.

It wouldn’t be wrong to say that WEB 1.0 was more of a content delivery network- an easy platform to transfer information from one person to another via websites and webpages, and the content was served from the server file system.

Web 2.0 (1990-2018)

As the world entered the last decade of the previous century, the internet started changing shape, and the focus shifted more towards the consumer. The number of users who now had access to the internet also increased manifold, thus changing the whole dynamics of the world wide web and being known as Web 2.0. 

While the Web’s back-end technical aspect continued to grow during this period on the base of Web 1.0, the way the web pages were designed and used changed significantly, Web 2.0 was a significant upgrade to its previous version as the content now was more user-generated, usable, and interoperable. It allowed free sorting of information and permitted users to retrieve and classify information. Web 2.0 also opened doors to interaction and collaboration between users, thus enriching the whole internet experience where users could do much more than just sharing information.

As the way the data was consumed started changing, the web browsing technologies also leveled up and started using more AJAX and JavaScript frameworks, thus further enriching the user’s experience. JAVA was introduced in the year 1995 and helped in delivering lightweight ways to provide client-side programmability and richer user experiences by creating small applets which generated dynamic content. However, the potential of the web to deliver complete-scale applications didn’t hit the mainstream till Google introduced Gmail, quickly followed by Google Maps, web-based applications with rich user interfaces and PC-equivalent interactivity. The collection of technologies used by Google was christened AJAX. 

Web 2.0 also introduced several tools and platforms that allowed users to interact much more with the applications with ease without having to spend hours writing codes as they had to in Web 1.0. This also expanded the use-case of the world wide web to the user who could now share multimedia over the internet and could do things like podcasting, blogging, tagging, social networking, among others. 

Web 3.0- A Look into the Future

As we look at the history of the internet and where we stand today, we can gauge that a more semantically intelligent web could hold the future. While it would be too early to define the whole of Web 3.0 today, the upcoming version could use and integrate many other innovative pieces that are present today, including peer-to-peer (P2P) technologies like blockchain, open-source software, virtual reality, Internet of Things (IoT), and more. 

Currently, many applications are restricted by design and run only on one operating system. Web 3.0 could enable applications to be more device-agnostic and interpretable, meaning they would run on many different types of hardware and software without any added development costs.

As we look at Web 3.0 in the making, it sure looks to be heading in a direction where the Internet would become more open and decentralized. In all probability, it will be more potent than its predecessors and some of the features that could contribute to its superiority would include decentralization, increased interconnectivity, more efficient browsing due to semantics and metadata from Web 2.0, improved advertising and market, and better customer support. 

While exciting times lie ahead with Web 3.0 in the making, the journey that the internet has gone through in its various phases of evolution is commendable and leaves no doubts that it will keep on growing as technology, content and the way data is produced and consumed keeps on changing. While it’s still not easy to define Web 3.0 yet, innovations in other technological fields have already set its making in motion.

DeFi Basic

Key DeFi Terms

DeFi Key Terms

Get introduced to building blocks of DeFi

Key terms in DeFi

  • AMM: Automated Market Makers (AMMs) have disrupted the traditional way that buyers and sellers come together. They allow digital assets to be traded in a permissionless and automatic way by using liquidity pools rather than a traditional market of buyers and sellers. AMM users supply liquidity pools with crypto tokens, whose prices are determined by a constant mathematical formula. So, instead of two parties coming to an agreement, traders can instead interact directly with a smart contract and execute the trade

  • APR: APR represents the annual rate charged for earning or borrowing money. APR does not take into account the compounding of interest within a specific year. It is calculated by multiplying the periodic interest rate by the number of periods in a year in which the periodic rate is applied. It does not indicate how many times the rate is applied to the balance

APR is calculated as follows:

APR = Periodic Rate x Number of Periods in a Year


  • APY: APR also represents the rate charged for earning or borrowing money but does take into account the frequency with which the interest is applied—the effects of intra-year compounding. 

Here’s how APY is calculated:

APY = (1 + Periodic Rate)Number of periods – 1


  • Borrowing Rate : This is the rate a borrower will pay to borrow tokens. The Borrowing rate will always be higher than the Lending rate.
  • CEX: Centralized Exchange. Even though these exchanges cater to decentralized digitized assets, they act as centralized authorities and take custody of a user’s funds on deposit.  Binance and Coinbase are examples of CEXs. 


  • Collateral: This is an asset used to secure a loan. In the traditional world of finance, one might put up their home as collateral to secure a cash loan. In DeFi, one puts up cryptocurrency tokens as collateral to borrow other tokens.

  • cTokens: These are Compound’s native tokens. When a user supplies assets to the Compound protocol, they receive cTokens. These, in turn, represent claims on the asset pool.
  • Deflationary Token: Tokens are “deflationary” if a percentage is permanently removed from the marketplace over time. Buy-backs and burns are popular ways of destroying tokens. This causes scarcity which hopefully makes the price rise
  • dApps: Decentralized applications. These are digital apps that run on a blockchain outside the control of a central authority.
  • DEX: A DEX, or decentralized exchange, is a type of cryptocurrency exchange. It operates like a stock exchange, except smart contracts run it. These smart contracts enforce rules and execute trades. Unlike a Centralized Exchange (CEX), a DEX does not take custody of a user’s funds.  


  • ETH: ETH stands for Ethereum tokens. These are digital assets built on the Ethereum blockchain.

  • Flash Loan: Flash Loans are futuristic and next-generation DeFi and native to the crypto space. A borrower can take out a flash loan with no collateral. However, it must be repaid within the same block, or the entire transaction is canceled. 


  • Flash Swaps: Similar to Flash Loans. A user can withdraw a token and use it before paying for it.
  • Gas: Gas is used to calculate fees on the Ethereum network. Every smart contract execution on the Ethereum network requires gas. When the network is more congested, gas prices are higher. 
DeFi Basic

TradFi vs DeFi

TradFi Vs DeFi

Old World vs New World! A detailed comparison

Finance has had a riveting story of evolution and metamorphosis over the centuries. What goes back to trading goats and pebbles in barter to using payment gateways on handheld devices, the way money is moved, and how the transaction is recorded has come a long way. And with the advent of blockchain, the game has just changed completely. 


In the last decade, finance demonstrated an “about face” that on a business level, dismounted the lure of unicorn fintechs in terms of fees in favor of DeFi, which behind powerful memes and anon coders hides the most successful and fluid business models in recent history.  But in this short period of existence, these innovative aspects of finance have created enough stir to challenge the traditional aspect of finance and its institutions. While it may be too early to say, these newer aspects have started showing signs of how the future of finance would look like. And the difference is so significant in the way they work that the world has started to draw a line between and dividing it into two phases, something that you call Traditional Finance or TradFi and Decentralized Finance, also known as DeFI. Let us dive in deeper to understand each of these phases.

TradFi- Traditional Finance 

With the advent of DeFi, the term “TradFi” was also coined, which is the short form of traditional finance. TradFi encompasses conventional financial institutions like banks, asset managers, insurance companies, private equities, real estate funds etc. While banks in various forms had existed for centuries, the first traceable history of how a modern-day bank looked goes back to 1694 when the Bank of England was founded to take care of the Gold of business people that traveled to the country. As carrying gold was complex and had its other cons, keeping gold in secure vaults at the Bank was a better option for business people.  Business people were given a receipt for their gold, which allowed them to redeem their precious metals upon exiting the country. 


While providing security to Gold was paramount, with time, the bank realized that they could profit from the amount of gold passing through their vaults. If businessmen were not returning to claim for their gold for some time, the bank would lend out their gold in return for an interest rate on their deposit. As this was a form of passive income for the businessmen, it made sense for them to be ok with the bank doing this.

This continued over time and soon businessmen became comfortable in transacting with banks and soon the physical gold was replaced with receipts of gold that the bank distributed against the gold it had in its vaults. The bank-distributed paper allowed the recipient to claim the amount of gold stated on the receipt. This was the beginning of gold-backed paper currency, distributed in correlation to the amount of gold a government is holding.

But soon, the cracks began to appear in this system as greed and deceit crept in, debasing the nation’s currency as banks started printing more receipts (currencies) compared to the gold they held in the vaults calling for a change in the system.

It was the year 1971- a significant milestone in TradFi when money changed forever.  Many countries realized what banks were doing, and they started to demand their gold back. Again in the center of the controversy was one of the powerful fiats called the US dollar. Unable to fulfill every demand of returning gold, President Nixon famously unpegged the backing of the US dollar to gold.

The debt ceiling was removed, and the government could print as much money as they liked giving these centralized financial institutions unlimited power. Each time these institutions printed more money, the currency was devalued. And the actual holders of wealth, the ordinary citizens, started losing the value of money they held thanks to inflation that the centralized system had created by having more money into circulation in the economy.

This same system has continued for over 50 years, and more and more money has entered the system devaluing the fiat currency more and more every day. A decision of few has made the citizenry more vulnerable. While TradFi has its share of pros and cons (cons overpowering the pros), the non-availability of an alternative has forced most people to stick with the system. Weighing in the pros and cons should give us a better insight. 

Pros of TradFi

  • TradFi is currently the largest and the most familiar financial infrastructure and has the most number of users. 
  • TradFi has a well-established history, and the systems are tried and tested. 

Cons of TradFi

  • The user or the ordinary citizen has negligible control over the decision that is taken over their money.
  • The banks loan out the actual funds, and the visible account balance is IOU from the bank.
  • The banks’ transactions are extremely slow and expensive both in terms of time and money. The opportunity cost that a user bears while the transaction is being processed is pretty significant.
  • Fiat currency is mostly inflationary  
  • Recent times have shown as an aspect of the economy where banks haven’t hesitated in implementing negative interest rates. This means customers have to start paying the banks to keep their monies. 
  • Requires various laws to be abided by, and consistent paperwork is also needed, especially in large transactions.

DeFI- Decentralized Finance 

With so many cons that come with TradFi and a couple of malpractice incidents carried out by the oligarchs in power that led to the collapse of the whole system, the ordinary citizens have started questioning the system as a whole. 

This led to forming a system that was independent of these centralized financial institutions that had unlimited powers. This was the start of the innovation called blockchain, which has shown a roadmap on how financial systems could work in a decentralized, trustless, and permissionless manner, giving ordinary citizens an alternative over TradFi called the Decentralized Finance or DeFI.

DeFi is an open financial sector that runs on software built on top of a public blockchain at its core. It involves building financial products and services on top of a blockchain to promote an open financial system that promises to end the over-reliance on centralized institutions that are submerged in rules, regulations, and compliance protocols.

DeFi leverages and uses advanced, agile tools to give control to users of what happens with their monies. The new trend offers extra functionality and reduces operational risks, making it an ideal replacement for the current financial system.

Since the steam is catching up, DeFi, many projects have already taken the TradFi functions to blockchain and have begun showing signs of growth, offering an alternative. But while these systems have their pros over TradFi, they are not entirely free of cons. Time to look at those aspects of DeFi

Pros of DeFi

  • DeFi is permissionless, trustless and censorship-resistant
  • It is fast and has borderless operations 
  • Available all the time 24x7x365
  • Cheaper transaction cost than TradFI
  • Stablecoins, a critical component of DeFI, act as a hedge against local currency debasement.
  • DeFI provides higher yields as compared to TradFi
  • Less regulatory scrutiny

Cons of DeFi

  • There is an initial learning curve to understand DeFi, which is predominantly due to its nascency.
  • The user is responsible for his private keys, which, if lost, could lead to financial loss forever as there is no customer service and no way to recover the lost keys
  • The risk by user errors is far higher in DeFi 
  • Lack of clarity on regulation can be a deterrent and hinder the adoption

The Final verdict 

While blockchain in the global financial system is still in the early days, one cannot dispute this technology’s ultimate potential and the problem-solving capabilities that TradFi lacks. Decentralized finance has what it takes to revolutionize the financial sector in a time of growing concerns about data and privacy security.DeFi could be the ultimate winner here because so many people are gaining access to banking services in areas where traditional finance has failed its massive potential.

DeFi Basic

What Is DeFi?

What Is DeFi?

Learn what DeFi really means and what it offers

DeFi is short for decentralized finance which generally refers to a novel industry of financial products and services that are built over Web 3.0 and are accessible to everyone, permission-less. It is an alternative to the traditional financial system which is opaque, centralized, very tightly controlled by dynastic oligarchs, and has been there for centuries now. The emergence of DeFi has been so strong that people already touted it to be better than traditional finance. This is because DeFi has managed to do what traditional finance and its institutions were not successful in doing- be transparent and exchange information with its users. DeFi allows for the exchange of trustable data across a system, mitigating these barriers to business financial services. At times, the transparency level in DeFi can be electrifying, especially if you had to deal with step-by-step approach in TradFi. Transparency also means building a product that is understandable with a very clear UX/UI, which makes user onboarding seamless.

In DeFi, a smart contract replaces the financial institution in the transaction. A smart contract is a type of self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. Today, a set of smart contracts have the capability of replacing certain financial intermediaries (e.g decentralized exchanges, lending institutions etc). Contracts can be coded to hold,  transfer or redeem funds based on certain conditions. No one can alter that smart contract when it’s live – it will always run as programmed unless encountered by some technical glitch or a bug. While Ethereum was the one that pioneered smart contracts in recent years, many protocols have been able to replicate the success that Ethereum once enjoyed monopolistically. The whole blockchain ecosystem is evolving to solve the inherent limitations of Ethereum. Many interesting solutions are emerging. Be it Polygon which is an interoperability and scaling framework for building Ethereum-compatible blockchains or L2s like Arbitrum, zkSync, Optimism; today DeFi users have a plethora of options to choose from. 

With DeFi the user exerts total control over their monies and also has visibility on how, when, and where it is being deployed without having to rely on a central institution like banks. Take an example of Rabby, Digital Wallet build for DeFi world. One of the key features of Rabby is that user gets a detailed and transparent view of each transaction before approving. 

Being borderless, DeFi opens up financial services to anyone in the world providing instant exposure to digital assets that are global in nature, something not possible in TradFi due to reliance on local currencies, laws, and banking options.  There are already numerous projects over various protocols that help users carry out all traditional finance functions such as lending, borrowing, taking long/short positions, earning interest, etc.  So far, tens of billions of dollars worth (USD 71.36 billion to be precise- while going to press) of crypto assets have flowed through DeFi applications, and that figure is only growing every day.

DeFi is booming! It is paving the way for a trustless and permissionless financial ecosystem, where the user doesn’t have to pay heavy fees, wait long hours and abide by rules created by others. If you are still at the fence, the time has come for you to jump it for good.  

DeFi Basic

Security & scalability

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DeFi Basic


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