It has been a wild ride for Decentralized Finance (DeFi) in the last year. From being a tiny niche market to roaming the mainstream media landscape, DeFi has been gaining a lot of attention over the past few months which is only increasing.
Thanks to its innovative opportunities, this disruptive technology has caught the eye of financial leaders around the world, prompting interest in its power to reshape the traditional finance system. With the rise of DeFi, the possibilities to more easily manage income, debt, and investments are becoming a reality.
The real key to the success of DeFi lies in its transparency. In stark contrast to traditional finance, DeFi transactions are recorded in a transparent public ledger system, known as a blockchain. This type of ledger offers transaction history, which makes it easier to guarantee a secure and fair marketplace.
One of the newest applications of DeFi is the ability to offer borrowing and lending opportunities. This has allowed users to lend money to one another without relying on middlemen or banks, significantly reducing the costs associated with obtaining a loan. Borrowers are able to borrow funds for a variety of uses such as access to capital, real estate purchases and more.
Recently, DeFi platforms have also been introducing new tools to increase the level of trust they offer their users. One such example is MakerDAO, which allows its users to generate a digital currency “DAI” that is pegged to the US Dollar with their cryptocurrency. This solution provides liquidity while giving users the power of “smart contracts” which allow users to borrow funds in a secure and automated way.
Although DeFi faces certain challenges in terms of scalability and adoption, its growing popularity and the number of startups entering the space show tremendous potential for the future. With the help of blockchain technology, it has the potential to revolutionize finance and unlock significant opportunities for users across the globe.
As 2020 comes to a close, it’s clear that DeFi will remain a hot topic in the financial world. With its potential to revolutionize the way people access funds, it’s no surprise DeFi has become one of the biggest disruptors of 2020.
The potential of DeFi to develop crypto infrastructure is undeniable. New financial tools, applications, and services are continuously being introduced and the whole community is actively excited about its rapid development. As more users come to recognize its advantages, DeFi promises to reshape the traditional finance system.
As the world moves closer to a more decentralized and open finance system, DeFi will remain at the forefront. Over the next year, its role as a catalyst for change in the finance world will only increase. Keep your eyes peeled, follow us for the latest in DeFi news, and stay tuned for more!