1. What is DeFi?
DeFi is an acronym for Decentralized Finance (decentralized / open finance). This is the term used to refer to financial applications built on Blockchain.
More specifically, DeFi is the "way" to bring traditional financial products to the decentralized "land". There, the need for a third party is eliminated (or minimized), transparency and safety are enhanced, and the cost is reduced.
2 Main advantages of DeFi:
The traditional financial system relies on intermediaries such as banks and courts to provide arbitration.
The DeFi application does not need any intermediaries or arbitrators. The code program will specify the way of resolving any disputes that can occur and users always maintain control of their money. This helps to reduce the costs associated with providing and using these products and creates a smoother financial system.
The fact that these new financial services are deployed on blockchains eliminates damage at a point. The data is recorded on the blockchain and spread across thousands of nodes, making it difficult to censor or shut down a service.
Because frames can be built in advance for DeFi applications, deploying a framework is much less complicated and much more secure.
This open ecosystem has another great advantage for those who do not have access to any financial services that can access the ecosystem. Because traditional financial systems depend on intermediaries seeking profits, their services often do not provide low-income communities. However, with DeFi, these costs are reduced significantly and low-income individuals can benefit from a variety of financial services.
