Have you ever provided liquidity to a liquidity pool just to realise that some of your coins have gone missing? In this video, we’ll learn what “impermanent loss” is and how it can affect liquidity providers’ profits.

In essence, impermanent loss is a temporary loss of funds occurring when providing liquidity. It’s very often explained as a difference between holding an asset versus providing liquidity in that asset. Impermanent loss is usually observed in standard liquidity pools where the liquidity provider (LP) has to provide both assets in a correct ratio, and one of the assets is volatile in relation to the other, for example, in a Uniswap DAI/ETH 50/50 liquidity pool.

If ETH goes up in value, the pool has to rely on arbitrageurs continually ensuring that the pool price reflects the real-world price to maintain the same value of both tokens in the pool. This basically leads to a situation where profit from the token that appreciated in value is taken away from the liquidity provider. At this point, if the LP decides to withdraw their liquidity, the impermanent loss becomes permanent.

A few useful charts and calculations ► https://medium.com/@pintail/uniswap-a-good-deal-for-liquidity-providers-104c0b6816f2

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So have you ever been wondering how lending and borrowing works in DeFi? How are the supply and borrow rates determined? And what is the main difference between the most popular lending protocols such as Compound and Aave? We’ll answer all of these questions in this video.

Lending and borrowing is one of the most important elements of any financial system. Most people at some point in their life are exposed to borrowing, usually by taking a student loan, a car loan or a mortgage.

The whole concept is quite simple. Lenders a.k.a. depositors provide funds to borrowers in return for interest on their deposit. Borrowers or loan takers are willing to pay interest on the amount they borrowed in exchange for having a lump sum of money available immediately.

DeFi lending allows users to become lenders or borrowers in a completely decentralized and permissionless way while maintaining full custody over their coins.

📘 DeFi Guide ► https://finematics.com/guide-to-decentralized-finance/
📖 Post ► https://finematics.com/lending-and-borrowing-in-defi-explained/
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So what are NFTs all about? And how can they be used in decentralized finance? You’ll find answers to these questions in this video.

💛 Gitcoin ► https://gitcoin.co/grants/1158/finematics-defi-education

Okay, so let’s start with what NFTs actually are. NFTs stand for non-fungible tokens and they are one of the types of cryptographic tokens that can represent ownership of digitally scarce goods such as pieces of art or collectibles.

“Non-fungible” is not a very popular word so let’s see what it really means.
In economics, fungibility is the characteristic of goods or commodities where each individual unit is interchangeable and indistinguishable from each other.

Although NFTs can be implemented on any blockchain that supports smart contract programming, the most noticeable examples are ERC-721 and ERC-1155 standards on Ethereum.

When it comes to DeFi, NFTs can unlock even more potential for decentralized finance. Currently in DeFi, the vast majority of DeFi lending protocols are collateralized. One of the most interesting ideas is to use NFTs as collateral. This means that now you’d be able to supply an NFT representing a piece of art, digital land or even a tokenised real estate, as collateral and borrow money against it.

📖 Post ► https://finematics.com/what-are-nfts-and-how-can-they-be-used-in-defi
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So what exactly is gas? Why are transaction fees so high at the moment? And what are some of the ways to make the transaction cost lower? You’ll find answers to these questions in this video.

Gas is a unit used for measuring the amount of computational effort required to perform specific actions on the Ethereum blockchain.

The name itself hasn’t been chosen by accident. Similarly to gasoline fueling a car and allowing it to drive, gas on the Ethereum network fuels transactions and allows them to perform different operations.

Every operation on the Ethereum blockchain, or to be precise on the Ethereum Virtual Machine (EVM), has an associated gas cost. For example: adding 2 numbers costs 3 gas; getting the balance of an account - 400 gas; sending a transaction - 21,000 gas.

Smart contracts usually consist of multiple operations that together can cost even hundreds of thousands of gas.

What is interesting is that the gas cost by itself doesn’t tell us how much we have to pay for a particular transaction. To calculate the transaction fee we have to multiply the gas cost by gas price.

The gas price is measured in gwei - a smaller unit than ether where 1 gwei equals 0.000000001 ETH. We can think about it as a major and a minor unit similarly to dollars and cents.

📘 DeFi Guide ► https://finematics.com/guide-to-decentralized-finance/
📖 Post ► https://finematics.com/what-is-gas-ethereum-high-transaction-fees-explained/
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What is Proof of Work in cryptocurrencies? Proof of Work can be really confusing, but it's just a way for a bunch of people to compete in a blockchain. The winner gets a mining reward and to add the next block. Proof of Work is the first and most commonly used consensus model - its used by Bitcoin!



Learn more about PoS (Proof of Stake):
https://youtu.be/vZ2UZdB07fo

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In this video, we explain how pubic and private keys work in cryptocurrency wallets. In short, these wallets use asymmetric encryption to allow users to stamp transactions with their private key. Other users can verify their transaction by using the sender's public key.

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Wanting to learn what a Cryptographic Hashing Function is? Maybe you're wondering what exactly the math that is happening when someone mines for a bitcoin. Well, in this video we explain how cryptocurrencies offer security and trust through some very complex math.

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Are you wondering what a Smart Contract is? Well, a smart contract is an agreement between multiple people who agree that a piece of code will be executed if certain conditions are met. Right now, I know of 4 main use cases for Smart Contracts, and they are:

1) Flash Loans

2) Insurance

3) Token Switching (Decentralized Exchanges)

4) Buying and Selling real world representations

Watch our animated video on Smart Contracts to understand how each of these examples currently work and what their potentials are in the future!

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