What is DeFi?

Decentralised Finance (DeFi) is an emerging new concept in the financial sector that offers innovative solutions to traditional financial problems. DeFi uses blockchain technology to create a decentralised financial ecosystem where users can access financial services such as borrowing, lending, saving and more.

Decentralised finance is becoming a fast growing sector in the world of finance. According to data from DeFi Pulse, a DeFi data tracking platform, the total value that is locked up (TVB) in decentralised finance protocols reached an all-time high of over $90 billion in February 2023, an increase of over 900% since January 2021.

One of the main advantages of DeFi is its decentralised nature. Unlike traditional financial systems that are regulated by governments and central financial institutions, DeFi is designed to be accessible to all, without geographical, economic or social discrimination. Users of decentralised finance have full control over their financial assets, without having to go through trusted third parties.

DeFi also offers increased transparency through blockchain technology. All transactions made on the blockchain are recorded in a public and verifiable register, providing greater transparency and security for users.

In addition, decentralised finance offers competitive interest rates for savers and lower borrowing costs for borrowers. DeFi’s lending protocols are designed to eliminate the additional costs associated with traditional intermediaries such as banks and brokers, allowing for lower interest rates for borrowers.
But DeFi is not without risks. The decentralised nature of DeFi means that there is no central regulator to ensure the safety and stability of decentralised finance protocols. Users should exercise caution when using DeFi platforms and inform themselves about potential risks such as hacking attacks, security vulnerabilities and market price fluctuations.

In conclusion, decentralised finance offers a new world of financial possibilities for users around the world. However, users need to be aware of the risks and take steps to protect themselves when using DeFi protocols. The decentralised finance industry is constantly evolving, and it will be interesting to see how it develops and evolves in the coming years.

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