Today a new era of decentralized finance has been born. Decentralized Finance or ‘DeFi’ is the vision of a fully autonomous financial industry, free of the need for intermediaries. With the goals of DeFi, users can enjoy censorship-resistant access to investments, insurance and markets.
It’s no surprise that DeFi has been one of the most talked about trends this past year, as the sector broke through various technical and financial milestones. There is no question that DeFi is here to stay, having introduced users to a new world of financial opportunities.
For those just getting started, it’s important to understand exactly how DeFi works and what are the drivers of this revolution. DeFi is based on the concept of permissionless and trustless finance, meaning that users can use the platform without needing permission from anyone or trusting a third-party intermediary to handle the financial transactions. There are various types of DeFi platforms, from lending protocols like Compound that allow users to lend and borrow cryptocurrencies, to DeFi insurance protocols like Nexus Mutual that allow users to insure their funds or even decentralized derivatives that allow users to trade leveraged positions.
Another key factor behind the success of DeFi is its underlying blockchain technology, Ethereum. Ethereum is a smart contract platform that facilitates the deployment of DeFi applications. Smart contracts allow developers to build decentralized applications on top of an underlying blockchain network and are the backbone to the DeFi ecosystem. With Ethereum, developers can launch a variety of DeFi protocols and provide users with a fully transparent and efficient way to access financial services.
Overall, DeFi is ushering in a new era of financial services, allowing users to access a wide range of financial services without needing to trust a third-party intermediary. With developers leveraging Ethereum’s smart contract capabilities, it is possible to build fully trustless financial infrastructure that enables users to access investments, lending, insurance marketplaces and more with total confidence.
Today’s milestone is an exciting step forward in the DeFi revolution, and it looks like there’s plenty more to come. Be sure to follow us to get the latest in decentralized finance news and updates!