In this article, we will discuss what is DeFI in detail. Let’s start.
What is DeFI?
DeFI is a short form of the term decentralized finance. As the name indicates it aims for a peer-to-peer financial system without the need for centralized financial institutions or a third party.
How Does a DeFI Work?
The technology behind this decentralized financial system is a public blockchain network including, smart contracts and cryptocurrencies.
Decentralized finance was previously known as open finance. It removes the intermediary party or centralized institutions between the user and the business and forms an open peer-to-peer connection for decentralized exchanges. There is no bank or financial institution overlooking the user’s financial transactions and bank account as in centralized finance.
The DeFI network is considered a transparent financial network. The blockchain code is open-source which means that users can access and review it with full transparency. Traditional financial institutions do not offer such transparency.
Moreover, there are no …