@Jesus 17 November 2020

Smart Contracts In Financial Application

Financial primitives: core financial functions coded into smart contracts **Smart contracts** are very flexible and offer solutions for industries such as energy, logistics, healthcare, and in particular, the financial sector. Here, smart contracts can enable simple functions such as payment (**stablecoin**) and credit (**lending/borrowing**), as well as more complex functions such as derivatives (**leverage, swaps**) and trading with crypto assets (**decentralized exchanges**) – fully automated and decentralized without any intermediaries. Decentralized application that are based on a set of interacting smart contracts and serve these basic **financial functions** are referred to as financial primitives.

Already today, financial primitives can incorporate functions like payment, lending & borrowing, trading, wealth management, derivatives, insurance and probably many more. While most of the **DeFi** applications are still analogous to existing financial products from the established financial world, one can expect entirely new DeFi use cases to emerge in the future. In theory, everything that is programmable is imaginable. Financial primitives are the backbone of DeFi. A number of financial primitives build an ecosystem of interoperable services, i.e. the DeFi ecosystem. **You can think of them as Lego bricks that can be plugged together with other Lego bricks as desired**.