# FAQs

#### What is Layer 2?

* _Layer 2, in the context of blockchain architecture, denotes an additional stratum built upon the base layer or Layer 1. Its purpose is to enhance the blockchain's scalability and performance by permitting off-chain transactions and data storage._&#x20;
* _The objective of Layer 2 solutions is to tackle the constraints of Layer 1 blockchains, which may be sluggish and costly due to the necessity of processing and validating every transaction on the network. By transferring certain transactions and data storage off-chain, Layer 2 solutions can potentially lessen the burden on the base layer, improve the speed and reduce transaction costs._&#x20;
* _There are various kinds of Layer 2 solutions, including payment channels, sidechains, and state channels. These solutions employ diverse techniques to facilitate off-chain transactions and data storage, such as utilizing smart contracts or multisignature addresses to ensure transaction security and data confidentiality._&#x20;
* _Layer 2 solutions are a critical field of development in the blockchain space, as they have the potential to drastically enhance the scalability and utility of blockchains. Nonetheless, they also present their own set of challenges and trade-offs, and their implementation and adoption may differ based on the specific needs and objectives of a given Origen DeFi network._

{% embed url="https://academy.binance.com/en/glossary/layer-2" %}

#### What is Perpetual Trading?

* _Perpetual trading, also known as perpetual swaps or perpetual contracts, is a type of derivative financial product that allows traders to speculate on the price of an underlying asset without an expiry date. These contracts have features that are similar to futures contracts, but they do not have a fixed expiry date or settlement date. Instead, they are designed to be held indefinitely, with the investor making periodic payments to maintain their position._&#x20;
* _This allows traders to take advantage of price movements on a continuous basis, rather than being limited to the expiry of a traditional futures contract. Perpetual trading is commonly used in the cryptocurrency market, where it is often offered by decentralized exchanges (DEXs) as a way for traders to speculate on the price of various digital assets._

{% embed url="https://academy.binance.com/en/articles/what-are-perpetual-futures-contracts" %}

#### Transformation of Industry

* _Web 1.0, Web 2.0, Web 3.0_&#x20;
* _The financial service industry is accelerating the adoption of Web 3.0._

<table><thead><tr><th width="187">Description</th><th align="center">Web1</th><th align="center">Web2</th><th align="center">Web3</th></tr></thead><tbody><tr><td></td><td align="center"><p><strong>Web1.0</strong></p><p>The Hypertext Web</p></td><td align="center"><p><strong>Web2.0</strong></p><p>The Social Web</p></td><td align="center"><p><strong>Web3.0</strong></p><p><em>The Semantic Web</em></p></td></tr><tr><td><em>Features</em></td><td align="center"><em>Read-only and Static Web</em></td><td align="center"><em>Interactive, read and write</em></td><td align="center"><em>intelligent and decentralised</em></td></tr><tr><td><em>Use cases</em></td><td align="center"><em>Content and information publishing</em></td><td align="center"><em>Social Media, Microblogs content hosting, podcasts</em></td><td align="center"><em>DeFi, tokenization of asset, online gaming, distributed ledgers, NFT, CBDC, P2P transfer</em></td></tr><tr><td><em>Examples</em></td><td align="center"><em>CNN, BBC</em></td><td align="center"><em>Amazon, Apple, Meta, Microsoft, Twitter, Google, Tik Tok</em></td><td align="center"><em>Amazon Alexa, Wolfram Alpha, Apple’s Siri</em></td></tr></tbody></table>

#### &#x20;Web 3.0 and Evolving Landscape

* _Change the existing narrative by introducing blockchain technology and artificial intelligence into the play._

#### Blockchain and Decentralization

* _Provide the assurance of cryptographic security for user data._
* _Help in encouraging communication between software and browser plugins._
* _Leverage blockchain technologies to ensure transparency in the ecosystem, thereby providing better scope for audits and security._

#### Why DeFi is an Important Trend in Web 3.0?

* _Decentralized finance on blockchain as part of Web 3.0 Today, we see DeFi not just mirroring traditional finance, but going beyond what is currently offered._

#### Life Before Decentralized Finance

| DeFi                                                                                             | Traditional Finance                                                                                                           |
| ------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------- |
| _You hold your money_                                                                            | _Your money is held by companies_                                                                                             |
| _You control where your money goes and how it's spent_                                           | _You have to trust companies not to mismanage your money like lend to risky borrowers_                                        |
| _Transfers of funds happen in minutes_                                                           | _Payments can take days due to manual processes_                                                                              |
| _Transaction activity is pseudonymous_                                                           | _Financial activity is tightly coupled with your identity_                                                                    |
| _DeFi is open to anyone_                                                                         | _You must apply to use financial services_                                                                                    |
| _The markets are always open_                                                                    | _Markets close because employees need breaks_                                                                                 |
| _Its built on transparency-anyone can look at a product's data and inspect how the system works_ | _Financial institutions are closed books: you can't ask to see their loan history a record of their managed assets and so on_ |

#### The Rapid Rise of DeFi

* _DeFi has grown at an impressive pace since the summer of 2020._
* _DeFi really took off in 2020._

{% hint style="info" %}
_**1 BILLION DOLLARS**_

_The total value locked (TVL) into DeFi projects sat at about $1 billion worth of cryptocurrency deposited in DeFi applications._

_**50 BILLION DOLLARS**_

_The TVL figure exceeds the $50 billion mark. Peaked at over $181 billion in Dec_

_2021, according to data from DeFi Llama._
{% endhint %}

{% embed url="https://defillama.com" %}

#### So how does DeFi conform to the principles of Web 3.0?

*   _**Non-custodial**_

    _Non-custodial means the decentralized applications you interact with don’t control your data – only you do._
*   _**Open**_

    _Unlike in the traditional financial system, anyone is able to gain access. There are no gatekeepers who work to find reasons to disenfranchise people or limits on how much and where you can send assets._
*   _**Transparent**_

    _Any transaction is traceable and can be inspected by anyone, with code for applications used to perform financial operations being open-source._
*   _**Decentralized**_

    _Transactions are verified by nodes, computers around the globe running the blockchain’s software. This ensures that one centralized party cannot gain control._

#### _In the DeFi sphere,Dapps are becoming more sophisticated and reaching into new areas._

_Here are some of the popular types of applications._

* _**Decentralized exchanges (DEXs):** DEXs are a hot type of online exchanges which connects users directly so they can trade cryptocurrencies with one another without trusting an intermediary with their money, whether U.S. dollars for bitcoin or ether for BTC._
* _**Lending platforms:** These platforms use smart contracts to replace intermediaries such as banks that manage lending in the middle._
* _**Derivatives – futures** and options exchanges built on decentralized exchanges are the next big thing._
* _**Prediction markets:** The goal of DeFi versions of prediction markets is to offer the same functionality but without intermediaries._

#### &#x20;_Binance Smart Chain_

_In 2020, Binance Smart Chain (BSC) was introduced to the world. BSC was born in time for the DeFi revolution._

_**Advantages of Binance Smart Chain(BSC)**_

*   _**Transaction Speed**_

    _One of the fastest smart contract platforms._
*   _**Generate a Block**_

    _in three seconds, 4X faster than Ethereum’s 13 seconds._
*   _**Low Gas Fees**_

    _Costs an average of 5 Gwei, 8x cheaper than Ethereum._
*   _**Cross-Chain Compatibility**_

    _Increases token liquidity, utility, and value._
*   _**EVM-Compatibility**_

    _it’s faster and cheaper to run dApps on BSC._
*   _**Credible Platform**_

    _An important role in the PoSA consensus by vetting all validators on the network, ensuring that the blockchain is secure and reliable._
