Each billions of dollars are traded through stocks, transfarred through banks and online gateways.The money is always moving.But It is done in centralized way ,which can it less transparent sometimes and give certain individuals or authorities control when it shoudn't.
Decentralized Finance also known as DEFI is movement that aims to make a new finance system , which is completely free from any controlling authority, in which know third party is involved for you, Or you don't require to be certain individual from certain place.DEFI is a market where anyone from anywhere can trade and exchange crypto, it doesn't require any intermediaries such as banks.
DEFI heavily relies on cryptography and smart contracts. A smart contract is a code stored and executed on blockchain, which means DEFI applications also exist on blockchain making them trustless and secure.
The biggest DEFI project and success till date is Compound. Compound is an autonomous and interate rate protocol to supply assets like ether and start making interest on the them. It's same as your bank account where you deposit your money and earn a certain interest over a certain period of time.Also you borrow from Compound by giving a collateral to it.
AAVE is another DEFI project, with clever usage of smart contracts and certain incentives , we can create a stable coin that is pegged to US dollar without having to store dollar in the real world.
Another application of DEFI is Decentralized Exchanges, where users can trade with each other in decentralized.where prices are aren't by any entity.
In Prediction market Augur is decentralized prediction market protocol, with Augur you vote on outcome of events, except you put skin in the game by attaching a value to it.
Syntax is a platform that let's users create and exchange synthetic versions of assets like gold, silver, crypto and currencies like EURO and are backed by excess collateral in synthetic contracts.
PoolTogether game is a game in which all participants pool together there DAI coins and at the end of the month one lucky participant is award all the interest on total money, while other participants get back there deposits without losing any money.
Margin Trading is practice where one uses borrowed funds to increase the position in certain asset, For Example Buying some other crypto with borrowed funds as you are expecting that crypto's price to go up and earn profit.
The biggest risks associated with DEFI are software bugs, which can exploited or damage trading, further more cryptocurrencies market crash can impact heavily on your investment, so one should careful while investing.
DEFI is still on its early stage, The move will sure get strong in near future, There has a lot development being done into bringing up new platforms and DApps for end users. At the end of the day it will be sure be a lucrative market for investors to invest.
