A Deep Dive Into DeFi & Why You Should Be Paying Attention

We can all agree on one thing - things move fast in crypto. DeFi is, however, here to stay. Learn all about DeFi in this article!

We can all agree on one thing – things move fast in crypto. Just a single month can seem like a year, so it’s easy to feel like you’ve missed the boat or you’ll never catch up.

But this is why RugDoc is here to help!

Who is This Article For?

In short, this article is for anyone who is curious about DeFi.

This is for:

  • Your cousin who is interested, but thinks DeFi is ‘too complicated’
  • Your friend who has had enough of you talking about crypto and wants to give it a try, but doesn’t know where to start
  • Your mum who has heard about all this Bitcoin stuff on the news and wants to see what it’s really about

If we really want to change the current out-dated financial infrastructure, we need mass adoption of DeFi.

But how do we achieve this?

Through education! It is our goal here at RugDoc to make DeFi accessible to absolutely everyone.

But first…

In order to understand why we need DeFi, we need to take a look at our current banking system:

To open a bank account, everyone needs to go through Know Your Customer (KYC) – you need to provide documents to verify your identity. Without the right documentation, you can be denied the right to open an account.

This strict policy means that 1.7 billion people in the world are unbanked – they have no access to any kind of checking, savings or mobile money provider accounts.

It also means they cannot take out loans, mortgages or insurance and there is no protection whatsoever if their money is lost or stolen.

These are things that most of us take for granted. The financial exclusion those 1.7 billion people face undermines their quality of life and is responsible for the lack of economic growth in many developing countries.

How can they find their way out of poverty if they don’t have access to basic financial services?

For those who do have an account, the average interest rate for a savings account in the US is 0.04% – there is no incentive to save, only to spend. Some countries even have negative interest rates..!

Want to make a wire transfer? Sure!

That will take up to 3 working days with a 3% fee (up to 5 days for an international transfer). Fun fact – this hasn’t changed since wire transfers were invented in 1871!

These are just a handful of the problems we face with our ‘modern’ banking system.

If only there was an alternative…

Something that exceeded traditional finance in ways you didn’t even know were possible.

Yep you guessed it…we are talking about the power of DeFi.

Can You Explain DeFi in a Simple Way?

DeFi is an open and borderless financial system built using decentralised blockchain architecture. The purpose of DeFi is to advance financial freedom for everyone. DeFi projects are built with ‘smart contracts’ that practically run themselves using computer programming.

Until very recently, these tools were only available to a select few and often restricted by conflicting political interests. Today, they are accessible to anyone with an internet connection. 

Not only is it open to anyone, DeFi protocols are governed by the users themselves.

What Are The Benefits of DeFi?

An infographic explaining the 5 traits of DeFi. This infographic explains the benefits of DeFi, including being transparent, permissionless and open to everyone, fast, secure, and cheap to use.

There are 5 main benefits of DeFi:

  • Transparent – nothing is hidden, every transaction can be viewed on the blockchain by anyone, at any time.
  • Permissionless – anyone with internet access can start using DeFi.
  • Fast & Flexible- crypto never sleeps, and we’re open 24/7/365! There’s also no need to wait days for transactions to finalize – usually just minutes or even seconds! There’s also the term ‘money lego,’ which refers to protocols building on top of each other and working together to create the ultimate disrupter to traditional finance!
  • Secure – information stored on a blockchain is distributed across an entire network of users. This information is permanent and irreversible, which makes it extremely difficult for malicious actors to compromise the system. You also no longer have to rely on banks or the elite groups who run these institutions. This means you can send funds instantly to anyone in the world in a completely permissionless way. DeFi has eliminated all the unnecessary intermediaries!
  • Cheap to use – each transaction on the blockchain can cost as little as fractions of a penny!

Why is Decentralisation Good?

Decentralization isn’t only “good” – it’s the future! With DeFi, there isn’t a single point of control. The responsibility is distributed across the network all over the world.

Ultimately, it’s the users who govern the system, and anyone can suggest ideas to improve a protocol. This has never been possible with the current financial system.

DeFi is built for the people. It’s no longer a system which only benefits people with powerful connections or extreme wealth – like we said earlier, DeFi is for everyone.

Can I Trust This Technology?

The code that defines what these smart contracts do can be inspected and monitored by anyone 24/7, so you can see how your money is put to work.

Can you say the same when you deposit money into your bank?

Users can also take out insurance for their funds when interacting with DeFi in case you want to cover your funds just in case.

Furthermore, sound projects are heavily audited – the code is checked thoroughly to make sure there are no bugs or opportunities for hackers to manipulate the code and put funds at risk.

More Great Things About DeFi

Oh no, it doesn’t stop there.

With DeFi, you can:

  • Trade peer-to-peer using decentralised exchanges (DEX) without any intermediaries.
  • Borrow money permissionless using collateral.
  • Lend assets and earn interest for doing so.
  • Access high interest rates for stable assets that are pegged to the US dollar – currently ranging from 4 – 20% (yes, you read that correctly!).
  • Have access to the most advanced Yield Aggregators which find the most profitable strategies to grow your assets – a tool which was previously only available to a select few. A great option if you want to deposit and leave funds to grow without worrying where to move funds for a higher return.
  • Provide liquidity so users can easily buy and sell – in return, you earn a portion of the trading fees. In many cases, you also earn additional tokens.
  • Take part in Governance and decide the future of various projects.

Now, Your First Assignment…

Share this article with a friend or family member who isn’t yet familiar with DeFi. Help spread the word and bring the future one step closer!

The world is waking up. It’s time to take back control of our financial future and make a stand against the current system. We are in the process of completely disrupting and rewriting the entire financial industry. 

So let me ask you one question – are you ready to join the DeFi revolution?


🟢 For owners who have made impactful changes and would like an update to their farm review:

1️⃣ Use #update at @RugDocChat with your description and proof of changes and it will be forwarded to our scanners.

2️⃣ This does not guarantee a change in your review.

3️⃣ Owners who have difficulty solving the issues can consider our Consultation Package – please contact @BaymaxCrypto on Telegram to discuss.

Our mission here at RugDoc is to screen for hard rug code that results in 100% theft of ALL underlying funds for ALL participants.

This is the ONE part of the due diligence process that most people cannot simply do on their own as it costs thousands of dollars to hire a senior solidity developer to look over a farm for safety.

A project coin with terrible code can go up in price, and a project with good code and a good team can also go down in price.

Do NOT use our ratings to refer to your likelihood in making money if you invest in the project. They are ONLY in reference to code safety.

Everything else beyond code safety is YOUR responsibility to go do research on. We just make sure the casino you’re betting in won’t rob you before you even get to place a bet.

Our reviews for projects are organized into a few colors.

🟢 Least Risk
These projects are the least likely to hard or soft rug. Usually reserved for cornerstone projects of an ecosystem where it makes no financial sense for them to rug in any manner as they make more money just being legit.

🔵 Low Risk
These projects are usually established projects in an ecosystem that have a track record of success or have KYC’d to us or other authoritative sources in the real world. As a result, it is extremely unlikely for them to soft rug or hard rug their projects. The projects can still fail and the token price can go down, but usually more as a result of natural market forces.

⚪️ Some Risk
This is the default rating for projects with unknown teams but have code that is unlikely to have hard rug risk. Since the team is unknown and doesn’t have a track record of success, it’s entirely possible that they may try to soft rug by dumping tokens, abandoning the project, etc. Even a last minute contract swap to a malicious contract is possible. The only thing that is unlikely is a complete hard rug as long as you are 100% sure you deposit into the contract we review.

🟠 Medium Risk
Similar to Some Risk, but the underlying code itself is custom enough or complex enough that it warrants an elevated risk rating that needs deeper research. Make sure you read every point presented to make sure you’re comfortable with that before entering. Still unlikely to hard rug, but more chances of custom code behaving incorrectly and causing other issues.

🔴 High Risk
Project contains code or practices that are HIGHLY LIKELY to lead to catastrophic losses as they are right now. Make sure you read the description carefully as we will always warn what these issues are. If you see the words Hard Rug anywhere in the review, STAY FAR AWAY!

⚫️ Not Eligible
We reserve the right to not review exceedingly complex projects that would require tens of thousands of dollars of senior security analyst man hours. Typically these are projects that deal with leverage, lending, options, derivatives, and anything that is overly complex and which requires tons of peer reviews and audits from top audit companies.