DeFi coins are very important because they provide the necessary liquidity to perform transactions on exchanges. This means that DeFi coins can transfer value to and from exchanges in the same way that fiat currency does. For example, when you make an online payment in dollars or euros, you send the money to someone’s bank account.
Your bank converts the money into dollars or euros by debiting a dollar account and crediting a euro account. The bank keeps a record of the amount of money in your account. It holds a reserve of cash that can be used to pay for your purchases.
Your bank can also keep cash in its own bank to satisfy the demand for a specific currency that exceeds what it has on hand. DeFi Tokens coins make the same type of transactions as traditional fiat currencies because they can be exchanged to each other. This allows people to do things like exchange one DeFi coin for another.
For example, if you have a certain amount of US dollars and you want to trade that amount of cash for euros, you would convert the dollars into euros first. Then you would exchange the euros for DeFi coins. This can be done on platforms such as Coinbase, GDAX, or Gemini. Some people choose to avoid converting their funds to fiat currency because it involves using services such as Western Union and MoneyGram.
