DeFi, or decentralized finance, refers to the various financial services on public blockchains, primarily Ethereum. DeFi can provide most of the services that a bank provides, but without the paperwork or involvement of a central authority. The transactions are made using cryptocurrency and are global. It is a peer-to-peer system of executing transactions, which means that no central authority is involved in routing these transactions.
DeFi provides for all the banking transactions for digital money, i.e., cryptocurrency, but without any central party involved, which eliminates all the associated costs as seen in the conventional banking system, for example, banking properties, employee salaries, brokerage, etc. It has the potential to create open, free, and fair financial markets globally that are accessible to everyone with an internet connection.
1. Fast: Transactions take place instantly without any paperwork, and the interest rates and rewards often update quickly, and the interest rates are significantly higher than the traditional system.
2. Transparent: As all the data is available on a public blockchain, everyone can see the transactions happening on the blockchain, which usually the current private corporations don’t provide.
3. Flexibility: The assets can be moved from one place to another instantly without any permission and paying expensive fees.
4. No registration: You don’t need to open or register to make an account; instead, you hustle to get access by creating a wallet.
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