Financial system
It is a concerning reality that not everyone in the world has access to the traditional financial system. There are many reasons why this is the case, including poverty, geographic location, or lack of identification documents. This lack of access to financial services can make it difficult for people to save money, make payments, and plan for the future.
Centralized finance (CeFi)
The traditional financial system uses centralized institutions to oversee the buying and selling process of financial products. These institutions also have the power to deny people access to their service or products at any time.
Transitioning to an alternative system
However, there is a solution to this problem. It is seen as “the future of finance”. It is called decentralized finance. It has the potential to bring financial services to people who are currently underserved by the traditional financial system. The goal is to create a more inclusive and accessible financial system for people around the world.
Decentralized finance (DeFi)
DeFi is a form of financial services that uses blockchain technology and decentralized protocols to enable financial transactions and services. It allows anyone with an internet connection to access a range of financial services, such as borrowing, lending, trading, and payments, without the need for intermediaries like banks or financial institutions. Which means nobody has the control to block or deny somebody access to the system.
Benefits
Decentralized finance is faster, more efficient, and more transparent than traditional financial systems, and it offers a higher degree of security due to the use of blockchain technology. A user can lend, borrow, earn interest and much more in a decentralized setting, without the need of a bank account.
- Anybody can set up a digital wallet for fee and in minutes
- You have control over your own money
- Nobody can block you from any services
- Markets are always open (24/7)
- Transfers are private, instant and immutable
Decentralized finance applications
There are three popular DeFi-categories that are seen as the backbone of decentralized finance. These allow users to take out loans, earn interest on their digital assets or trade there without the need of a bank or revealing their identity.
- Lending or borrowing
- Trading
- Derivatives
Popular DeFi dApps
Here is a list of popular decentralized finance (DeFi) services on Ethereum. These are just a few examples of the many DeFi services and dApps that are available. DeFi is a rapidly growing and evolving space, so new services and dApps are being developed all the time.
A decentralized exchange (DEX) that allows users to trade Ethereum-based tokens.
A decentralized lending and borrowing platform that offers a range of financial products.
A platform that allows users to take out loans collateralized by cryptocurrency.
A decentralized oracle service that allows smart contracts to access external data.
A decentralized lending and borrowing platform.
An open protocol that allows users to build decentralized exchanges on top of the Ethereum blockchain.
A crypto market lending platform.
Bet on outcomes of sports, economics and other world events.
Peer-to-peer trading platform.
Disclaimer:
Decentralized finance is a new kind of service running on the blockchain. Before depositing any large quantities of money, make sure you understand the risks and check out if the service is legitimate.
