What Is DeFi? All You Need to Know

Weary of paying hefty transfer charges, financial institutions delaying your transactions, or governments monitoring your financial activities?

Then, DeFi to the rescue!

At a glance, DeFi is an emerging financial blockchain-based technology that aims to create an open and transparent platform for people to transfer assets without the interference of third parties.

And with $100 billion worth of investment, DeFi is one of the biggest things in crypto that neither you nor Wall Street can shy away from.

All the deets in a bit.

DeFi, also known as decentralized finance, is a blockchain-based technology used to develop financial applications and cryptocurrencies.

It’s an alternative form of traditional banking and seeks to disrupt traditional financial services. So where you’d usually open a savings account or borrow a loan from a bank or any other centralized financial institution, DeFi, instead, allows you to perform these financial transactions on a public blockchain network (mostly Ethereum blockchain).

These transactions — saving, borrowing, and lending — are made possible through decentralized apps (DApps) built on the blockchain: and no bank or intermediary is involved.

These financial services are automated and ran on smart contracts — self-executing contractual agreements that run without needing banks or lawyers.

Decentralized applications or DApps are blockchain-based applications or programs that are powered by smart contracts. They're so similar to traditional apps that it may be difficult to spot a difference.

However, the major differences between dApps and traditional apps is that DApps run on a Blockchain or peer-to-peer (P2P) network. And they are not controlled by a single or centralized authority.

That said, unlike the bitcoin blockchain that was developed to handle bitcoin transactions, the Ethereum blockchain was developed to host other software/applications called dApps.

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