With the rise of blockchain technology, we have seen the possibilities of decentralized finance increase exponentially in recent years. DeFi, or decentralized finance, offers users complete control over their funds and many new opportunities to realize their financial goals through cryptocurrency-backed loans, smart financial contracts, and other systems that run on distributed ledgers. What is DeFi? Why should you care? And what can you do with it? Let’s take a look at these questions and more as we explore DeFi and its various applications.

What is DeFi?

Decentralized finance—often called DeFi—refers to the shift from traditional, centralized financial systems to peer-to-peer finance enabled by decentralized technologies built on the Ethereum blockchain. In particular, crypto-financial projects are a subset of these types of platforms that provide tools for financing themselves and other crypto assets without any central authority or intermediary involved.

The purpose of decentralized finance is to build an open and accessible ecosystem where all users can participate in building something new. There are many different ways this manifests itself in practice: self-crowdfunding using tokens that represent shares in a company; investing in other cryptocurrencies through lending platforms; participating in prediction markets like Augur; and more generally creating new economic models for the internet age through projects like MakerDAO’s Dai stablecoin or Compound’s interest bearing cryptocurrency deposit accounts.

Benefits of a decentralized financial system

A decentralized financial system has a number of benefits over a centralized one. 

• It is more resilient to shocks and disruptions because there is no central point of failure.  
• It is more accessible and inclusive, since anyone with an Internet connection can participate. 
• It is more transparent and accountable, since all transactions are recorded on a public blockchain.
• It is more efficient, since there are no middlemen or intermediaries. 
• It offers greater security, since user funds are stored in smart contracts that cannot be hacked or stolen. 
• It allows for the creation of new financial instruments and products that were not possible before. Finally, it has the potential to democratize finance and give power back to the people.

How does it work?

Decentralized finance—often called DeFi—refers to the shift from traditional, centralized financial systems to peer-to-peer finance enabled by decentralized technologies built on the Ethereum blockchain. One way that DeFi has changed how we interact with money is through payments and lending apps such as Request Network and Dharma Protocol. Request Network is a payment platform that allows anyone in the world to request a payment while keeping their personal information private from the recipient. Dharma Protocol connects investors who want higher returns than what they can get from banks with borrowers who need loans at a lower interest rate than what they can get on credit cards or personal loans. These apps allow for new ways of exchanging value using technology without needing an intermediary like a bank or credit card company.

Non-Custodial Lending + Securitization = The Future (?)

Decentralized finance, or DeFi, is a hot topic in the world of cryptocurrency and blockchain. On the surface, DeFi seems to be all about non-custodial lending and securitization. But what does that really mean? And why is it so important? Well, for one thing, these two aspects have huge potential for growth. That’s because they offer new methods of funding for borrowers with no credit history who don’t qualify for traditional loans from banks. Tytanid offer decentralized peer-to-peer lending using smart contracts

How do we use this in our lives?

Decentralized finance, or DeFi, is a rapidly growing sector in the cryptocurrency space that is unlocking new economic opportunities for individuals around the world. From earning interest on your digital assets to trading tokens without giving up control of your private keys, DeFi is bringing power back to the people. 

The word decentralized means distributed across multiple locations instead of being concentrated in one location. In other words, this means you don’t have to place your trust and funds into one single centralized entity such as a bank.

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• Source: Plato Data Intelligence: Platodata.ai