Decentralized Finance (DeFi)

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What is Decentralized Finance (DeFi)

Decentralized finance (DeFi) is one of the most talked about trends in the cryptocurrency world today. For those of us who are new to this trend, the only question is what is Decentralized Finance (DeFi)?

Decentralized finance or (DeFi) is not a very complicated subject. The matter is very simple. Simply put, decentralized finance (DeFi) is the decentralized financial system.

And this decentralized finance (DeFi) system on which the application is built is called DApps or decentralization application.

All of this is built on a smart contract. Such as Ethereum, Tron or Neo network smart contract etc.

It will be very easy to understand what DeFi is if we discuss our traditional methods before we get to know DeFi.

What is the centralized method?

We are all familiar with the banking system. All the banks in our country are under the control of Bangladesh Bank. In other words, the banking system of our country is completely centralized. Not only our country but the banking system of every country is regulated through the central bank of that country.

What is happening now that it is centralized? When you are using a banking system it means that you do not have complete control over your finances. Banks have the power to withhold your funds for any reason.

In a centralized system your funds but its authority is not entirely in your hands but in the hands of a third party. As a result, you have to rely on others for the security of your fund.

And the emergence of DeFi as soon as it came out of this system.

What is the decentralization method?

The decentralization method is the opposite of the centralization method. Decentralized finance where your funds and complete control are in your hands. Where no other third party has control over your funds. There is no need to rely on others for the security or control of your funds.

Features of Decentralized Finance (DeFi)

DeFi is a very new version in the world of blockchain. The 3 major features of DeFi are:

  • 1. Creating a financial banking system (on stable coins).

  • 2. Person-to-person or collective tax or loan benefits.

  • 3. Cotton enabling sophisticated financial methods such as dex (decentralized exchange), tokenization platform, decentralized and prediction market.

The reason why DeFi or Decentralized Finance is more popular nowadays is that here you can take direct loan or loan facility without any kind of intermediary or third party.

How does DeFi work?

DeFi works through blockchain. And this DeFi is made on a smart contract by DAPS‌ or Decentraliz application. Which is managed by a system determined by the episode. No person or organization has authority over it here. In a word, the system is active (automatic).

Yes, developers can work on that network to develop something. However, it cannot be controlled.

In a word, DeFi is a completely independent economic system. Now it remains to be seen how fast it can bring the world on one platform.

The future of decentralized finance (DeFi)

Since people prefer freedom, especially in the financial field, the issue is very difficult, in the current system. As a result, the future of DeFi or decentralized finance is likely to be bright. Although this method is very new, which needs to be further developed.

Since people have no need to rely on any third party for their finances as a result of using this method. So easily it has started to become quite popular with many. Seen as proof, Link, Lend, Maker etc.

Here are some important sites to keep an eye on DeFi-related tokens:

https://dappradar.com/defi

https://defipulse.com/

https://defimarketcap.io/

This was today's discussion. If the matter is presented in a very brief form.

Thanks for Reading...

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Comments

So good points. Well written.

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3 years ago

Thanks for you

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3 years ago

Amazing article by you my friend

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3 years ago

Thank you so much friend...

$ 0.00
3 years ago

We are all familiar with the banking system.very nice article.

$ 0.00
3 years ago

Yes.. Thanks for your words...

$ 0.00
3 years ago