Decentralized Finance (DeFi)

Decentralized Finance, commonly referred to as DeFi, represents a novel approach to delivering financial services to the general public, often eliminating the need for intermediaries.

Consider conventional financial services such as currency exchange, transfers, savings, and lending; now, these services are available online and digitally, making them global and easily transferable.

Additionally, they are programmable, enabling them to connect with other services through various protocols, all operating on the blockchain.

This marks a significant transition from a closed and centralized financial system to a more open-source and decentralized ecosystem of services.

DeFi also offers numerous advantages that traditional financial markets do not provide.

Transparency – Blockchains function as public ledgers, sharing records across a decentralized network, which enhances data transparency and visibility into who interacts with that data.

Immutability – Records on the blockchain are secure and permanent; they cannot be deleted or altered once they have been verified and added.

Being Permissionless – Permissionless blockchains are accessible to anyone with an internet connection and a crypto wallet, eliminating the need for banks and intermediaries in transactions.

Custody – Users of DeFi products and services can maintain custody of their assets without relying on third parties.

Open-source – Open-source software and collaborative efforts foster trust and enhance code quality, ultimately improving the user experience.

Smart contracts – These can be custom-designed to operate automatically, in a trusted manner, and anonymously.

DeFi transforms traditional financial services, which are often challenging for the average person to access, into easily accessible options through blockchain technology and smart contracts.