DeFi is the general name given to decentralized financial transactions consisting of the words decentralized and finance. DeFi is the name given to financial structures that are not dependent on any center or authority.
Systems that are decentralized and without decision-making authorities, such as Bitcoin and Ethereum, are ideal examples of DeFi. However, since financial instruments are not limited to sending and receiving money, it would be correct to bring more advanced financial functions to mind when DeFi is mentioned. These include obtaining loans, lending, decentralized exchanges, insurance, shopping, marketplaces and the like. For those who enable such more advanced features, Compound (COMP), Kyber Network (KNC), 0x (ZRX), Bancor (BNT), Synthetix Network Token (SNX), Maker (MKR), Uniswap (UNI) and Aave, which have tokens on our exchange (LEND) can be counted.
DeFi structures must have elements that somehow reassure their users. Although a decentralized structure sounds interesting, it can also be used for malicious purposes. Bitcoin DeFi structure is secured with an unbreakable and unchangeable mathematical formula.
All DeFi systems must have a cause and effect relationship. The transactions that can be made are clear and it is clear which transactions will be made under which conditions. Therefore, smart contracts, decentralized applications and consensus protocols have an important place in DeFi systems.
For What Purpose Did DeFi Emerge?
DeFi was launched to build a more democratic financial system after cryptocurrencies emerged for the purpose of freedom. Another most important purpose of DeFi systems is to enable people who do not have access to traditional financial systems to do their financial work.
About 1.7 billion people around the world do not have access to the traditional financial system, namely banking transactions. DeFi systems aim to reach these people who cannot be reached by the current financial system.
Although there are physical barriers to accessing banking systems, people’s distrust of the central banks is important.
What is the DeFi Difference?
DeFi ensures that people who cannot trust the bank can perform their banking transactions not by an authority, but through an algorithm created by the system. It allows you to be done with a certain formula with millions of devices connected to DeFi networks. For this reason, it is impossible for a center to intervene in DeFi systems. Users of the system also ensure that the system can work.
The advantages of DeFi systems in general are:
- It led to the emergence of decentralized exchanges.
- It has enabled the use of money-based banking systems by everyone.
- It has enabled users to borrow and lend transactions between users.
- It enabled the introduction of a new cryptocurrency to the market and the ability to raise funds for projects.
- It has enabled new available finance tools to be made available with DeFi.
Take a look at Hold on for Dear Life (HODL)
What is ERC-20 ? - Support Trade
[…] Click to read related article 👉🏻 What is DeFi? […]