What is Defi?

What is Defi?

Defi (Detcentalized Finance) is a generic name for financial instruments in the form of blockchain-based services and applications.
Open-source shared services aim to rеplace the traditional financial systеm (banks) and give users access to decentralized investment platforms and credit. Conduct finance and business without intermediaries.

Over the past few years, the number of decentralized software applications is growing, but most of the Defi projects are created on Ethetreum blockchain, and also on blockchains using smart contracts EOS, TRON.

Leaders among Defi projects: MakerDAO, Uniswap, Compound, Curve.
Their advantage over usual Internet services is that they don’t need centralized database.

Let us highlight the main components of Defi:

Digital assets – tokens that have value and allow exchange between users in a blockchain network;

Wallets – software applications that allow you to manage assets stored in blockchain;

Stablecoins – digital assets (linked to the quotation of gold, oil, and other commodities);

Smart contracts – blockchain-based software code that manages and provides information about the ownership of something;

The advantages of Defi inсlude decentralization (any user can see and obtain information about a transaction in the network), and the absence of human factor, which smart contracts exclude.

The disadvantages are the high probability of user error due to the fact that applications shift the responsibility for asset management to the users themselves and the low performance of the systеm (at the moment, blockchain technology is inferior to its centralized competitors in terms of speed).

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