# Learn How To Defi Part 1

**Published by:** [xuanling11](https://paragraph.com/@xuanling11/)
**Published on:** 2022-02-11
**URL:** https://paragraph.com/@xuanling11/learn-how-to-defi-part-1

## Content

Photo by Kelly Sikkema on UnsplashLet’s learn Defi together! I researched online and with my understanding about Defi. I put all the resources I gathered and made a Defi Guide in Notion page here. I shared my Defi cheat sheet here with you. TL;DR I layout questions: What is Defi? Why Defi? What are the risks of Defi? What is Defi? Defi or Decentralized Finance is a peer-to-peer financial system built on the Ethereum blockchain. It does not need third parties involvement like banks to charge services fees and to transaction your money slowly. Why Defi? In Defi, it can solve:Centralized control created a single point of failureLimited access: to be more inclusive to the unbanked population which estimated was 1.7 billion people in 2017Inefficiency: multiple charges on foreign transaction fees and other service fees charged with slow transaction speedLack of interoperability: artificially created barriers to switching services with high-cost feesOpacity: with no transparency on banks operations and to cause the financial crisis in 2008What are the risks of Defi? There are several risks associated with Defi.Smart contract risk: prone to hacking, and lost total of approximately $2.3B of 83 incidentsGovernance risk: induce governance attack through minting exceeded governance tokens from hackingOracle risk: if the cost of corruption is smaller than profit from corruptionScaling risk: particularly in Proof of Stake where stakers have more assets than the entire rest of the participantsDEX risk: vulnerable to sophisticated arbitrage botsCustodial risk: lost private and lost control of wallet due to hacking or scamsEnvironmental risk: wasted more energy on mining (up to debate)Regulation risk: overlapping jurisdictions and regulations to bring Defi under banking regulationsStay tuned for the next cheatsheet!

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