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DeFi is a decentralized financial service, commonly referred to as decentralized applications based on Ethereum. Simply put, it is financial software built on the blockchain, much like you make money from Legos. For a better understanding of the products and services that exist in the Ethereum DeFi ecosystem, check out the De Fi Ranking, which lists the top 10 most popular financial services in Ethereum and the world in general.
Over the years, computers have disrupted almost every industry, and every innovation has built on the previous one. Digital products and services have become more sophisticated, but they are still at an early stage of development.
From digital assistants to home automation, these programs influence many aspects of our daily lives today. Technology has made the world that is tailored to our needs a reality for many of us, not just for the first time in our lives.
What is decentralized finance?
To better understand DeFi, we should first look at how traditional finance came into being and how it begins to exist. If there is decentralised funding, why should the money be different and what is it for?
People originally traded goods and services for goods or services, and economies have done the same since the birth and development of human society. Sometimes you get the impression that money has always been there, but that is not always the case, at least not in the traditional sense.
The currency was invented to facilitate the exchange of valuable objects, but progress was not without cost. It ushered in a new era of economic growth and prosperity, and as a result contributed to the rise of the modern economy and the development of modern financial systems.
DeFi is different
Decentralised finance aims to create an open financial system that minimises the need to rely on and rely on central authorities. Technologies like the Internet, cryptography, and blockchain give us the tools to build and control our financial systems together without the need for a central authority. In most cases, investors receive returns that result from the risks of a central authority.
In the blockchain sector, there is a saying: "Do not trust, do not check, and check again." And in the case of DeFI, it is also "do not trust."
Ethereum and DeFi
Ethereum is a blockchain network that maintains a common register of digital value creation. Instead of a central authority, network participants control the creation, distribution and distribution of value decentrally. Almost all DeFi applications are based on Ethereum blockchain, the world's first and most popular blockchain technology. In a blockchain network, any transaction that is performed on it by a person can be verified by any person.
Decentralised finance has the potential to create a more resilient and transparent financial system. Anyone with an Internet connection can access and interact with smart contracts built on Ethereum's blockchain. Many of these contracts are designed to be safer and more transparent than any existing smart contract in the world. This allows users to review the code of smart contracts and choose the services that work best for them.
Sometimes the line between DeFi and technology becomes blurred, but over time the law will adapt to the changing financial landscape and its place in the world will become clearer.
One thing is clear, however, that DeFi will remain, and we are building more of its applications every day. If you believe in the future we have for digital money, come and explore what DeFi has to offer.