DeFi

What is DeFi?

DeFi (or “decentralized finance”) is a name for financial services delivered through public blockchains. With DeFi, you can do the majority of what banks do – earn interest, borrow, lend, purchase insurance, trade derivatives, and transfer assets — but it’s quicker and decentralized, requires no third party. As is the case with other cryptocurrencies, DeFi is worldwide, peer-to-peer (meaning that transactions occur directly between two individuals rather than being routed via a centralized system), pseudonymous, and available to everybody.

Importance of DeFi

DeFi builds on the fundamental concept of Bitcoin – digital money — by developing a whole new digital alternative to Wall Street, but without the accompanying fees (think office towers, trading floors, banker salaries). This has the potential to foster the development of more open, free, and equitable financial markets available to anybody with an internet connection.

How DeFi works

Users interact with DeFi primarily via software known as Dapps (“decentralized apps”), most of which are presently built on the Ethereum blockchain. In contrast to a traditional bank, there is no application to complete or account to establish

How to interact with DeFi today:

Lending: Lend your cryptocurrency and earn interest and benefits on a minute-by-minute basis, not just once a month

Obtaining a loan: Instantly get a loan without the need to complete documentation, even very short-term “flash loans” that conventional financial institutions can not give.

Trading: Conduct peer-to-peer transactions on selected crypto assets – as if you were buying and selling stocks without the need of a brokerage.

Saving for the future: Invest part of your crypto in alternative savings accounts and earn higher interest rates than you would normally get from a bank.

Purchasing derivatives: Place long or short positions on certain assets. Consider them to be the cryptocurrency equivalent of stock options or futures contracts.

Advantages of DeFi

• You are not required to submit an application or “open” an account. You only need to create a wallet to get access.
• You are not required to submit your name, email address, or any other personally identifiable information.
• You may relocate your assets anywhere at any moment, without obtaining authorization, waiting for lengthy transfers to complete, or paying exorbitant costs.
• Interest rates and prizes are often updated in real time (as frequently as every 15 seconds), and may be much greater than those found on conventional Wall Street
• Transparent: All parties may see the whole collection of transactions (private corporations rarely grant that kind of transparency)