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What is Decentralized Finance(DeFI)

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Vanessa Jane
What is Decentralized Finance(DeFI)

Decentralized Finance (DeFi) solutions have pocketed a whopping $29.8 billion now indicating tremendous growth amidst positive investor sentiment. 

What is the meaning of DeFi?

  • It refers to financial applications built on top of existing blockchain networks like Ethereum and TRON. DeFi is trustless and permissionless. 
  • It offers benefits like scalability, the absence of middlemen, liquidity, and transparency. 
  • DeFi applications use smart contracts and DApps to operate the business operations.
  • It includes various solutions like yield farming, staking, decentralized fund management, decentralized exchanges, lending, and borrowing platforms, prediction markets, synthetic assets, crypto banking facilities, and stablecoins. 

The Factors That Will Determine the Growth of Decentralized Finance in the Future?

  • Friendly regulations need to be passed by the authorities. This will ensure that investors’ rights are protected and it also leads to more trust. Bodies like the SEC (Securities and Exchange Commission) are recognizing the massive potential of DeFi. 
  • Many existing financial institutions like JP Morgan and the Royal Bank of Canada are extensively investing in blockchain technology and cryptocurrencies to bolster their business prospects. This will enhance user adoption and help in disrupting the mainstream economy. 
  • Due to the economic downturn in many countries due to the onslaught of the coronavirus pandemic, DeFi solutions offer more returns to investors than traditional investment avenues like savings accounts, fixed deposits, and equity shares. They give huge interest and attractive crypto tokens as incentives to the users. 

As seen above, DeFi will transform the whole world in the years to come. Users can handle all their finances with the help of smartphones and the internet. This will lead to a decentralized and democratic future without any chances of economic and social discrimination. 

If you wish to enter the promising world of Decentralized Finance, get in touch with a competent DeFi development company that will provide customized and result-oriented solutions at affordable prices.

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