What is DeFi (Decentralised Finance)?
With the invention of cryptocurrencies, finance becomes decentralised. A whole new industry was born — the Decentralised Finance industry (also known as DeFi).
So, what is decentralised finance?
Comparing DeFi with traditional or ‘legacy’ finance
DeFi vs. traditional financial services
Benefits of DeFi
- DeFi apps are designed for a global audience. Anyone from around the world can participate in DeFi platforms. All you really need is a smartphone with internet access. DeFi also offers programmability.
- Perhaps the most exciting potential of the DeFi movement is its ability to provide financial services for those who do not have access to traditional banking facilities. The current banking system leaves around 31 percent of the global population without any form of banking.
- Immutability. This means that data coordination across the blockchain is tamper-proof and this increases security and auditability.
- Interoperability. Since Ethereum’s software stack is composable, DeFi protocols and applications are built to be integrative and complementary to one another. This means that those involved in DeFi have the flexibility to build on top of other existing protocols, or to integrate other third-party applications. Think about DeFi as some sort of “money legos”.
What are my thoughts on DeFi?
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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated December 12, 2022