The crypto world can be hard to navigate. There's tokens, NFTs, Staking, the Metaverse, P2E, and DeFi. It's confusing and complicated to keep track of it all! When we talk about DeFi it's one of the more complicated concepts to understand.
DeFi is short for “decentralized finance,” which is an umbrella term for Ethereum and blockchain applications geared toward disrupting financial intermediaries. It isn’t controlled by a single, central source like a bank which is important because centralized systems and human gatekeepers can limit the speed and sophistication of transactions while offering users less direct control over their money.
DeFi is distinct because it expands the use of blockchain from simple value transfer to more complex financial use cases which is changing the financial industry. DeFi removes all middlemen from transactions.
When you make most transactions a financial institution sits between you and the business, with control over the transaction, retaining the authority to stop or pause it and record it in its private ledger. Crypto fixes this with open ledgers and P2P transactions. DeFi cuts the financial burden by removing the paperwork and cost associated with these services. No more complicated applications for loans and insurance. How about contracts for crowdfunding (DAOs), derivatives or betting. It can all be automated through smart contracts cutting the cost for consumers and removing unnecessary waste in the finance systems.
Since DeFi is changing the landscape these legacy institution are pushing back because they don't want to loose their monopoly on these income streams. I think in the next 10 years smart contacts will be the primary tool for financial transaction.
