Learn more about DeFi

Decentralized Finance (DeFi) is a financial ecosystem built on blockchain technology that aims to recreate and improve upon traditional financial systems.

Decentralized Finance (DeFi) is a financial ecosystem built on blockchain technology that aims to recreate and improve upon traditional financial systems - such as lending, borrowing, trading, and investing - without the need for centralized intermediaries like banks or financial institutions. DeFi operates primarily on public blockchains, most notably Ethereum, using smart contracts to facilitate transactions and automate processes. Here’s a deeper dive into the key aspects of DeFi:

What are key features of DeFi

• Smart contracts - They are self-executing contracts with the terms of the agreement directly written into code. They automatically enforce and execute actions based on predefined conditions, eliminating the need for intermediaries and reducing transaction costs.

• Open and Permissionless - DeFi platforms are generally open to anyone with an internet connection. There are no barriers to entry, allowing users to participate in various financial services without needing approval from a centralized entity.

• Interoperability - Many DeFi protocols are designed to work together, allowing users to seamlessly transfer assets and leverage multiple services across different platforms. This interoperability is a hallmark of the DeFi ecosystem.

• Decentralization - Unlike traditional financial systems that rely on central authorities, DeFi operates on decentralized networks, reducing the risk of censorship, fraud, and failure of single points of control.

• Transparency - All transactions on DeFi platforms are recorded on public blockchains, ensuring that they can be verified and audited by anyone. This level of transparency fosters trust among users.

What are benefits of DeFi?

• Financial Inclusion: DeFi has the potential to provide financial services to the unbanked or underbanked populations worldwide, enabling access to capital and investment opportunities.

• Increased Accessibility: With DeFi, users can access a wide range of financial services directly from their wallets, often with lower fees and fewer restrictions than traditional finance.

• Control Over Assets: Users retain control over their assets, as they are held in personal wallets rather than with a centralized institution, reducing the risk of loss due to institutional failures.