Ever since Bitcoin’s initiation in 2009, the concept of decentralized finance or DeFi has slowly come into being. As of 2022, the global DeFi crypto market cap is close to $48 billion. If you are new to the world of crypto, you may not be aware of the concept of decentralized finance. In this article, we take you through the notion of DeFi quickly and also tell you about some of the most popular DeFi protocols you can invest in today.
First Things First: What is DeFi?
DeFi is a global, open financial system designed to keep up with the digital age. It is a new financial technology that is based on secure distributed ledgers, similar to the ones used by cryptocurrencies. DeFi mainly consists of financial services and products provided on public blockchains, primarily Ethereum. It is a viable alternative to an opaque, tightly controlled system held together by decades-old infrastructure and processes.
As of right now, the DeFi applications we have available, like decentralized lending/borrowing and insurance, are essentially virtual representations of the same fiat applications, with the added benefit of being decentralized and handing over more control to the users of their own funds.
DeFi expands on the basic premise of Bitcoin, creating an entire digital alternative to Wall Street without any of the associated costs (think office towers, trading floors, banker salaries). The markets are always open with DeFi. Moreover, there are no centralized authorities to block payments. You won’t be denied access to anything. Services that were previously slow and vulnerable to human error are now automatic and safer, thanks to code that anyone can inspect and scrutinize.
How does DeFi work?
Decentralized finance employs the same blockchain technology as cryptocurrencies. You can earn interest, borrow, lend, buy insurance, trade derivatives, trade assets, and do a variety of other things with DeFi. In…
