Read time 8 minutes

Decentralized finance: Future or utopia?

DeFiBlockchain

What is DeFi?

How does DeFi work?

Advantages of DeFi

  • A new level of accessibility: Basically, anybody with an internet connection can have access to DeFi, so you don’t need a government-issued ID or any other document.
  • Accelerates the financial process: Because there is no need for middlemen or gatekeepers, smart contracts help to automatize the transactions. Complex transactions can be accomplished faster than in the traditional financial system.
  • Scalability: DeFi is built with open code, so users can improve the ecosystem when needed, which contributes to accelerating evolution and make finance highly adaptive to the users needs.
  • Avoid corruption and bureaucracy: The orders and transactions are executed when they fulfill the parameters established in the smart contracts, and the source code is auditable, which avoids unnecessary bureaucracy and makes corruption inside the system almost impossible.
  • Promote financial inclusion: There are a lot of people excluded from the current banking system, due to the lack of documentation, a bad economic situation, or because they live in remote areas, thanks to DeFi those people now have the option to access loans and several financial tools backed by crypto assets.
  • High-security standards: While most banks are highly digitalized, their structure remains off-software, meanwhile DeFi is built entirely in a cryptographic network, which provides higher security levels.
  • Users’ needs are prioritized: In DeFi there are no centralized institutions controlling interest rates or exclusive lenders earning a percentage of every financial and banking transaction as profit, so the development of the entire ecosystem is based on the needs of all the peers.

Could DeFi defeat the traditional financial system?

How to use DeFi?

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