Decentralized finance, better known as DeFi, represents a new paradigm that uses blockchain technology to transform traditional financial products and services into fully decentralized, open and direct forms. This shift to DeFi has the promising potential to transform the way money and value are transferred around the world.
Access to Financial Services
DeFi could help better financial inclusion. According to the World Bank, nearly 1.7 billion adults in the world still do not have a bank account. With DeFi, which is based on blockchain technology, anyone with internet access can use financial services, regardless of where they are located.
In DeFi systems, all transactions are recorded on the blockchain, which ensures complete transparency. Users can directly check how systems are programmed and see how assets are moving. This can help increase trust and security.
DeFi removes the need for intermediaries such as banks or exchanges, as users directly participate in transactions. This means that there is no need to pay commissions to intermediaries, which can reduce costs and increase efficiency.
Unlike traditional financial systems that have business hours or days, DeFi services are available 24/7. This enables faster transactions and access to financial services at any time.
Innovation and Product Diversity
DeFi enables the development of new and innovative financial products and services. These include smart contracts, decentralized exchanges, interest rate platforms, insurance, derivatives and more.
However, it is important to emphasize that DeFi also brings many challenges and risks, including technological failures, security threats and regulatory issues. Therefore, it is crucial that individuals who decide to get involved in DeFi first become well educated and understand these risks.
Although DeFi is still in its infancy, it holds great potential to transform the financial sector. By enabling greater inclusion, transparency and innovation, DeFi could represent the next big evolution in the world of finance.