What is DeFi 101 ?

DeFi means decentralised finance. 10 years ago, we saw the creation of Bitcoin — a decentralised money. Building upon this asset (decentralised money), we are now at the stage of decentralised finance.

We are basically programming code into the money (e.g. $Dai). And in the code, we incentivise people to put money in or take money out.

How? We do this by changing interest rates.

Why? This will change people's behaviours by creating loans and to encourage lending or borrowing.

Don't get it. Explain that again? When demand drops, the interest rate drops. People are more likely to demand more $Dai now, since it is cheaper.

When demand goes up, there is too much supply. Interest rates increase. People demand less $Dai because it's more expensive now.

Where is the "programming code" part? The change in interest rate is executed by programs and code!