Stablecoins. These are the bridge between centralized and decentralized finance. It is a cryptocurrency that is matched to a real-world asset. For example, Dai, tether, and USD are all that we call stablecoin. This is because their price is tied to the United States Dollar. The purpose of this is to have a reliable way to buy and sell certain coins without having to buy and sell them at all. Instead, we can just trade them. The traditional way of selling cryptocurrency through the centralized finance system takes up a lot of time and fees. instead, you can use a decentralized exchange to trade. That would cost you less time and money. It is also more secure because it is just code, it does not change.

Lending and Borrowing. One of the reasons we can reliably lend and borrow with banks is because we usually put something down like 20% collateral so that if we never pay back the full loan, our government can come after us and throw us in jail or make us pay that money. In short, there are legal consequences for not paying a loan back. Well, with crypto this is a problem. Because of anonymity, you could put down 20% and run away with the rest of the money. So we have to find a way to solve this. With smart contracts in the picture, we can actually allow others to use our funds while still keeping custody of it.

Decentralised Exchanges. You can use, for example, Coinbase or Binance. But it is highly recommended to remove your coins from exchanges because they are having custody over your private keys and hence coins and when they go bust your coins go with it. There are countless stories, hacks, and scams where people lost money in centralized exchanges. Alternatives are decentralized exchanges where you can trade peer-to-peer. Examples are Uniswap, Pancakeswap, 1inch and many more. These platforms make use of liquidity pools and AMM (automated market maker) to enable efficient trading.

Insurance. The definition of insurance is that a financial institution covers you for any future loss in exchange for premium that you pay. In the DeFi space, code and smart contracts manage a large amount of money and there are already today countless examples of exploits and hacks on smart contracts where billions were stolen. DeFi insurance protocols would allow you to hedge against the risk of an exploit of protocols where you have money locked. It can go further than that. Smart contracts can allow insurance companies to build a more cost-effective business by storing and managing policies using permissioned blockchains.