The term DeFi is not new to those already following the cryptocurrency market still when explaining it, somehow look a bit thicker.
DeFi is simply a decentralized finance application, that is, an application with all those banking services/payments without a third party or intermediary
Let's pick from the angle of a loan application. You borrow some money from a bank, it means you are using that bank as a means to access someone else's money and definitely you will pay back with interest which depends on the bank.
Think of the absence of a bank in this transaction, it is certain the charge in percentage by the bank would not exist, and you would consequently be able to pay much cheaper for a loan, and of course, the lender would still receive more, so all sides win.
The above scenario is possible through DeFi protocols that make use of Blockchain technology, and with this solution, it's important to look into more opportunities that arise from using DeFi.
DeFi applications are:
Access into a DeFi application required tokens (digital asset), that's why all DeFi applications issue tokens to users as a kind of virtual card to enter into the network and this also serves as a means of rewarding the platform users.
Trading Without an Exchange
A trading fee is a norm when transacting on an exchange and ownership of that account is not yours, but with the DeFi application, you exchange your asset, you would have ownership of your assets, we called this decentralized exchange transaction.
Examples of decentralized exchanges are UniSwap, PancakeSwap, QuickSwap and many others
Payment Without an Intermediary
DeFi application was able to achieve the means of payment without intermediaries, though if we consider the entire crypto ecosystem, this is not new as bitcoin does just that, but, the development increases daily and is so interesting to realize just how these applications have even solved the Bitcoin problem.
The major problem Bitcoin has is scalability and speed problems in its transactions and DeFi solved this.
Imagine trading bitcoin-backed digital assets without thinking of using BTC blockchain coupled with faster and cheaper transactions and managing to make BTC an even better payment method. To shock you, about 0.5% of existing Bitcoins is locked in DeFi on Ethereum's Blockchain and its spreading on other chains.
A New Financial Market In Town
In the short term of discovery of this technology has opened door to a new dynamic financial market, which is more decentralized, with fewer intermediaries, and can be very profitable for its users and may have a major impact on the entire market as we continue to expand.
However, it is important to be very careful of the hype that many people have with these assets, this development is still in the early stage and growing gradually.
In conclusion, DeFi is growing and gradually approaching a point whereby it becomes a daily use case, similar to traditional bank cards and fiat currencies, still, there are gaps bridges, get involved and trek gently.
