What is Decentralized finance?
Decentralized finance aims to transform technologies and processes such as transactions into the hands of individual actors so that they .do not rely on central institutions, whereas decentralized financing (Defi) replicates traditional financial services, but it does pay attention to transparency.
Applications are not managed or controlled by central authorities. However, it relies on blockchain technology, so transactions are done directly between users. Smart contracts allow the terms of the contract between the “buyer” and the “seller” to be written directly into the code.
In our article today we will learn about decentralized finance Defi and the most important information about it.
Fundamentals of decentralized finance (Defi)
Decentralized independent organizations are structures created to create fully functional organizations that completely dispense with hierarchical leadership. Bitcoin is often seen as the world’s first DAO, although it was Ethereum that developed the whole idea by expanding DAO structures using DApps technology and smart contracts.
Making crypto payments using bitcoin is perhaps the oldest and most famous example of a decentralized financial service.
Why is decentralized finance (Defi) important?
Until the 2008 financial crisis, it was unclear to what extent institutions were interfering in finances, as it became clear that traditional financial structures .around the world depended only on a few decision-makers, and only a short time later, in 2009, in conjunction with the publication of the White Paper of Bitcoin, initial ideas were presented to a financial service independent of trust.
Nevertheless, the adoption of the Ethereum. blockchain and the invention of smart contracts that opened the way for the first decentralized applications (DApps) has taken longer. DApps is computer software whose front component is available on users’ computers, while the back component is on the blockchain. For reminders only, smart contracts are programmed on the distributor’s book and then automatically executed once certain conditions are met.
Benefits provided by decentralized finance
As with other blockchain apps, the .biggest advantage of DApps is that it is decentralized, and cannot be restricted by a central authority, with Defi .projects operating completely independent of banks or other platforms and accessible 24/7 from anywhere. All contracts in the peer-to-peer network cannot be changed and are registered in the code.
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