I tried to explain what DeFi is in comic strips.
I explained what DeFi is and how DeFi works.
Some Takeaway
DeFi or Decentralized Finance is a crypto way to answer the current issue. It is a peer-to-peer financial system contrary to a centralized financial system. The benefits of DeFi are transparent and open to all. However, a centralized financial system that is closed-door deals with barriers to screening out participants. DeFi is not one answer to all solutions, but it is one perspective about how the financial system can evolve. It is also a practical application of smart contracts to become an intermediary to replace institutions. However, the integrity of smart contract technology is arguable which gives developers sole power to control how financial operations are fulfilled.
DeFi Investment
DeFi has been portrayed as a potential viable financial investment. However, it does not operate as everyone wants it to become. It is an alternative to institutional operations in which whoever joins the DeFi requires financial background rather than solely relying on the technology itself. Retail investors who have zero investment experience are highly likely to lose their investments through DeFi at some point because of a lack of understanding of its financial fulfillment obligations.
Smart Contracts
You may neglect smart contracts embedded into DeFi. However, how smart contracts are created is a key point on each DeFi project. Yet, such technology has been hidden without possible revealing to users to understand their operation. It is a gray area yet will never be resolved as the details of such smart contracts can be seen as a business secret. As a result, users will never fully understand such financial products while paying high risks to join DeFi projects that bear high risks of losing their investments.
Decentralization Finance
Of course, no one will deny the technology completely as the crypto space will evolve into more open-sourced projects in the future. We are likely to see more projects than are willing to share their codes and reveal their smart contracts for users to learn and help develop their financial future through DAOs. Or at least, we hope more and more projects will be more transparent in the future.
What Can DeFi Do
DeFi will not replace traditional finance but it will improve them. Implementing smart contracts can reduce operational costs in the long term. However, investors will always bear in mind risks in each DeFi project.
DeFi will bring potential disruption to the financial system. But financial security will be focused more on the future. It is essential to have secured smart contracts to prevent hacking incidents. Many projects were devastated because of hacking incidents. Once the DeFi was hacked, it lost its reputation and its ability to run smart contracts securely which is a crucial point for investors to watch. Thus, audit reports are very important to review prior to joining every DeFi project.
In conclusion
DeFi is one of the futures to disrupt the traditional financial system. However, it itself has many challenges in the future that users need to be aware of.
Photo by Andreas Brucker Unsplash
Note: the post was shared on multiple platformsYou can refer my previous article lists
Digital Commodities- the Unlimited Resources of Commodities Has Born
Universal Income in Crypto Way
DeFi 1.0 is Officially Dead - Welcome to DeFi 2.0
How Many Ads Are Too Much - Floki Inu Ads Got Backfire
Bitcoin ATM Adoption and Its Potential Security Vulnerabilities
When Corporations Are Running By Everyone
The Fundamental Value Is Irrelevant
Coinbase At Huge Reputation Crisis
Regulations Start Hitting Crypto Exchanges
From Bitcoin Standard To Zero-Knowledge Proofs - Decentralization 2.0
Shiba Hits 1 Million Users (Army) Milestone: What is Next?
How To Avoid Crypto Scammers
Shiba Game - When Meme Meets Metaverse
Twitter CEO Steps Down - A Full-Time Bitcoiner
Change of Macroeconomy Landscape
CBDC Is Losing The Game
Brief History of Ethereum and How Ethereum 2.0 May Over Promise
Who Cares If Craig Wright Is The Real Satoshi
Institutional Investors vs. Whales
A Proposal To Move Bitcoin Mining PoW Away
IMF Keep Crying Out, Crypto Adoption Keep Accelerating
Dogecoin Is Back to Top 10 But The Moon Shot Is Looming
How to Avoid The New Wallet Scam
Defi Enters To Crypto Bond Phase
What Types of Metaverse You Want
Global Regulations Are Coming Or Can They
IMF Did Have A Plan to Run Global Regulations
A New Malware Will Steal From Telegram
Smart Money Is Out, Institutional Money Is In
Airdrop?! Not So Lucky Anymore!
2022 Prediction #1: L1 Scalability
2022 Prediction #2: L2 Bridges
2022 Prediction #3: Zero-Knowledge Proofs or ZKPs
2022 Prediction #4: Regulated Defi On-Chain KYC
2022 Prediction #5: Institutional Crypto Adoption
2022 Prediction #6: Defi Insurance
2022 Prediction #7: NFTs-Based Communities - DAO 1.5
2022 Prediction #8: Metaverse and NFTs
2022 Prediction #9: Web2 Companies’ FOMO
2022 Prediction #10: Time for DAO 2.0
Crypto.com Backfire - When Centralized Crypto Service Panic
Coinbase Customer Service Alive
When You Want Someone Forget About What You Did, Just Change You Name
When YouTube Enters Into NFTs
Facebook Just Did the Rug Pull
Bridging Between Web2 to Web3 Through NFTs
Who Is The Winner of The Crypto Adoption
What You May Expect NFTs After 6 Months and Beyond
Wormhole Hack - It May Not Be a Bad Thing
Lessons Learned From Wonderland DAO
Crypto Comics - Who is Satoshi
Crypto Comics - What is Wallet
Crypto Comics - What is Coinbase
-------------------------------------------------------------------------------------Disclosure: The article was written by a delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matters. You should not believe any words this author wrote or you may experience similar symptoms or even possibly become a nut job.
