Why is decentralized finance (DeFi) growing so fast?

Posted by Bessie joans on December 15th, 2020

DeFi is Decentralized Finance, and It is an open-source financial ecosystem that allows the user to authorize their digital transactions. DeFi is a Blockchain-powered application that is exclusively run on the blockchain network.

Key Features of DeFi 

  •  Highly Efficient
  •  Permissionless 
  •  Limitless 
  •  Eliminate Geographical Barriers 
  •  Complete Control Over Digital Assets

DeFi allows users to authorize their financial transactions and digital assets. It is an Ecosystem built on a Decentralized method and blockchain-powered application that mainly works with the smart contract for lending and borrowing the assets on the liquidity pools. Interest and rewards are given as return for users who pool their digital assets in the liquidity pools. Where it provides the salary to the farmer who doesn't even have a bank account but they can get their salary through their mobile phones. the unbanked part of the population is the successors of Decentralized Finance development. Decentralized Finance (DeFi) is being developed on platforms like Ethereum, EOS, TRON, and IOST.

Why Ethereum Is preferred for Defi Development

  •  Multiple applications are coupled over the network and interoperability.
  •  It guarantees an advanced level of decentralization, open-source flexibility, and ensures that applications developed on the Ethereum platform will get the most usage in the long run.
  •  Ethereum is highly scalable and has consistent usage driving a rise in the choosing of Decentralized Finance (DeFi).
  •  A huge 203 projects have been built on Ethereum according to defiprime.com related to EOS has 22 projects, and Bitcoin has 26 projects on its platform.
  •  The different projects built on Ethereum include asset management, crypto wallets, management dashboards, options trading, insurance, and decentralized exchanges.
  •  Ethereum is the numero uno choice for DeFi projects with the highest number of applications being developed, application activity, user activity, and volume of funds traded.

 Aim of Decentralized Finance Development

  •  It intends to build a permissionless financial ecosystem open to everyone in the world based on blockchain support which functions utilizing public distributed ledgers.
  •  It comprises all activities in the mainstream financial system like trading, investment, borrowing, lending, Synthetic crypto asset management, insurance, asset control, and payments.
  •  It works mainly based on Decentralized Applications or protocols and guarantees a peer to peer financial network.

The Advantages Offered Through Decentralized Finance (DeFi)

  •  It is highly repellent to transaction alteration and assures active worldwide participation irrespective of social status and eliminate any third parties.
  •  Their transaction speed is ultra-fast and it takes 15seconds to execute the loan process and also performed at a low cost. The financial contacts are immutable.
  •  The user has full control over digital assets and data through the use of private keys.
  •  Transparency is guaranteed through price and business efficiency
  •  The third-party risks are least and all the personal interests of the users are directed through the transparent protocol.
  •  Users can sign up even without having a bank account or anonymously with the help of their publicly assigned address.
  •  It eradicates the dependency on any firms like governments and central banks.
  •  It operates with Smart-contract that are self-executing programs that do not allow any human interventions. 
  •  The requirement for a user to take part in the DeFi Ecosystem are a cryptocurrency wallet, a compatible device, and an internet connection to get started on a DeFi platform.
  •  It completely removes the geographical barriers by enabling the user to access the application from anywhere and anytime on providing their public and private key access.

Summing up

DeFi is growing exponentially as it aims to provide the complete decentralization of the financial transaction of the users and provides complete control over their digital assets. DeFi is booming as an Ecosystem that are providing associated financial services like Token, Smart-contract, Dapp, Wallet, Staking, Exchange, and Synthetic Assets, and much more that are interoperable on the Blockchain platform. If you are in the idea of evolving your business with DeFi Protocols it would be the best futuristic plan for your business. The total value locked in DeFi Application is .78B.

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Bessie joans

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Bessie joans
Joined: February 12th, 2020
Articles Posted: 35

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