What is DeFi?
Decentralized finance (DeFi) is a new financial system that is built on blockchain technology. DeFi applications allow users to borrow, lend, trade, and insure assets without the need for intermediaries such as banks or financial institutions.
How does DeFi work?
DeFi applications use smart contracts to execute financial transactions. Smart contracts are self-executing contracts that are stored on the blockchain. When two parties agree to a smart contract, the terms of the contract are automatically executed once the conditions of the contract are met.
How is DeFi different from traditional finance?
There are several key differences between DeFi and traditional finance:
Benefits of DeFi
DeFi offers several benefits over traditional finance, including:
Risks of DeFi
DeFi is still a relatively new and untested technology, and there are some risks associated with using DeFi applications. These risks include:
Overall, DeFi is a new and innovative financial system that has the potential to revolutionize the way we interact with money. However, it is important to be aware of the risks involved before using DeFi applications.