Introduction: What Is DeFi?
Decentralized finance, otherwise known as DeFi, has revolutionized the paradigm of traditional finance as we know it. But what is decentralized finance, and how has it impacted the way monetary instruments operate? Decentralized finance is, in essence, an umbrella term that consolidates cryptocurrency or blockchain applications geared towards disrupting traditional financial intermediaries. Centralized financial intermediaries are non-existent in the world of DeFi and non-custodial applications are the embodiment of how DeFi operates. Such intermediaries such as brokerages, exchanges or banks are traditional financial entities that operate as an intermediary, enabling your finances to be at the mercy of organizations other than yourself; although this maybe enticing, many individual’s wish to have complete autonomy and control over their own finances.
DeFi utilizes smart contract technology, such as Ethereum to allow individuals to borrow, lend, speculate on the price of securities, cryptocurrencies, stocks, bonds, real estate etc. and earn interest at rates unheard of in your traditional savings account. Decentralized finance is no longer exclusive to Ethereum; many blockchains such as Binance Smart Chain, Polygon, Aergo, ICON, Vechain (and many more) have conceived of their own blockchain applications dedicated to decentralized finance.
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