What is de-fi? Part 1
Decentralized Finance (DeFi) is an innovative and rapidly growing sector of the cryptocurrency industry.
Here are the first 5 of the top 10 things to know about DeFi
Definition: DeFi refers to financial systems built on a blockchain network, which operates in a decentralised and autonomous manner without the need for intermediaries such as banks or financial institutions. DeFi protocols aim to provide users with access to financial services such as borrowing, lending, and trading in a decentralised and transparent manner.
Key Features: DeFi platforms use smart contracts to automate financial transactions, enabling individuals to transact directly with each other, without the need for third-party intermediaries. This means that users have greater control over their assets and can transact with anyone, anywhere in the world without the need for intermediaries.
Cryptocurrencies: DeFi applications operate on top of blockchain networks, primarily Ethereum, which allows the seamless exchange of various cryptocurrencies and tokens. The use of cryptocurrencies enables fast, secure, and inexpensive transactions across borders.
Decentralized Exchange (DEX): One of the key components of DeFi is the decentralised exchange, which allows users to exchange cryptocurrencies in a trustless and decentralised environment. DEXs eliminate the need for a central authority to manage transactions, and users have complete control over their funds.
Liquidity Provision: Liquidity provision is a critical component of the DeFi ecosystem, as it helps to ensure that there is enough liquidity in the system for trading activities. Liquidity providers are incentivized to provide liquidity through the distribution of tokens, which can be traded on exchanges.