Hi everyone , in this blog we are going to learn about the basic defination of the Defi , use case of the defi , Protocols of the Defi .
What is Defi
Defi stands for the Decentralized finance which is an emerging technology which is totally based on the blockchain secure distributed ledgers similar to those used by cryptocurrencies. This system removes the complete third party which involved in passing or conforming the bill etc . This system remove the centralised system which cause many trust issue , money doubt etc . In centralized finance, your money is held by banks, corporations whose overarching goal is to make money. The financial system is full of third parties who facilitate money movement between parties, with each one charging fees for using their services
Key feature of the Defi
- This completely vanish the extra charge taken by the banks for using their services etc.
- Anyone with internet connection can use it without the third party involvement .
- You can transfer fund with in a minute or seconds.
- Anyone with good internet connection can see their money in the wallet as well as transfer the fund to other guy.
How Does defi work
The defi is work on the structure or application of the blockchain that cryptocurrency used .
The use of blockchain in this is that all the transaction which is done by the user is stored in the block and then verified by the miner . If these verifiers agree on a transaction, the block is closed and encrypted; another block is created that has information about the previous block within it .
All these block are linked together through the information in each proceeding block . Information in previous blocks cannot be changed without affecting the following blocks, so there is no way to alter a blockchain. All these secured protocols provides the secure nature of a blockchain.
There are various types of the defi products like Peer-to-peer (P2P) financial transactions are one of the core premises behind DeFi. A P2P DeFi transaction is where two parties agree to exchange cryptocurrency for goods or services without a third party involved.
Future of Defi ?
If we talked about the future of the defi , this technology is still in progress .For starters, it is unregulated, which means the ecosystem is still riddled with infrastructural mishaps, hacks, and scams. As we all are seeing that there is lots of the hack's , money laundering , millions of scams in the bank . To avoid these kind of mistakes defi comes in the action. With the use of the defi its impossible to hack this as this is based on the blockchain (dectralized distrbuted ledger ). As the goal of DeFi is to get rid of the third parties that are involved in all financial transactions.
Protocols in the Defi
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To understand all the protocols u should have the basic knowledge of the defi working and blockchian .
Programmability
Smart contracts are highly programmable and allow for the creation of new financial instruments and digital assets.
Transmutability
The decentralized architecture provides tamper-proof data coordination, enhancing security, and audibility.
Integrated information exchange
With Ethereum’s composable software stack, DeFi protocol and applications are constructed to be integrated and complementary. Utilizing DeFi, product teams and developers can build on top of established protocols, customize interfaces, and integrate third-party applications. These reasons account for the nickname “money Legos” given to DeFi protocols.
Unpermitted
By contrast with traditional finance, DeFi is defined by openness and permission-lessness, anyone with a crypto wallet and an Internet connection can access DeFi applications built using Ethereum regardless of their geography.
Self-Control
Participants in the DeFi market always retain ownership of their assets and control their data by interacting with permissionless financial applications and protocols using Web3 wallets like MetaMask.