It seems like everywhere you turn these days, you come across people talking about decentralized finance (DeFi). In the cryptocurrency world, DeFi is taking over and a lot of people are wondering what it is and why it is becoming so popular.
DeFi is a new form of finance where no central authority is required, and all aspects and activities of finance are conducted on a blockchain system. This opens up lots of different use cases and possibilities for users, allowing them to do things with DeFi that traditional finance doesn — or even wider cryptocurrency markets — cannot do.
DeFi is taking the cryptocurrency and blockchain world by storm. It is estimated that the DeFi market cap will hit the $100-$150 billion mark in 2021, and based on that projection we may be witnessing the dawn of a new era in finance.
For anyone unfamiliar with DeFi, it can be intimidating — the complexity of the technology and the seemingly never-ending number of companies offering various solutions can be a bit overwhelming. However, it is important to understand the basics of DeFi if you want to take advantage of the opportunities that it offers.
At its core, DeFi allows users to interact with assets on the blockchain without relying on third-party services, allowing for more transparency, control and privacy. It also enables decentralised lending and borrowing, and in some cases, even the possibility of interest earning.
With DeFi you don’t need any intermediaries or a centralised organisation to facilitate transactions, so you have complete control over your funds through automated systems. On top of this, DeFi also enables users to participate in a range of different types of banking, like yield farming and peer-to-peer transactions.
The DeFi market is still relatively young, but it is growing fast, and users across the world are looking to explore its enormous potential. For those eager to start their journey into DeFi, it is a good idea to start with the basics and understand how different protocols, platforms and tokens work together.
From there you can look at lending, borrowing and staking platforms, and also look at arbitrage and derivative opportunities. Over time you’ll build up a nice portfolio of tokens and ultimately get great rewards for being part of the DeFi family
There is no denying that DeFi has become the hottest conversation topic in the cryptocurrency world and the wider financial industry. Although it may feel intimidating for those who are new to the space, with the right knowledge DeFi can open up a range of opportunities for users of all kinds.
Whether you’re a casual investor or an institution, understanding DeFi and diving into its potential offers unparalleled benefits. To stay updated on all things DeFi make sure to follow us and check in regularly for more on the topic.