Discover the World of DeFi: Introduction to Decentralized Finance and its Explosive Growth
1. DeFi, or Decentralized Finance, is a rapidly growing subset of the blockchain industry that aims to create an open financial system, without intermediaries like banks or financial institutions.
2. According to DeFi Pulse, the total value locked (TVL) in DeFi protocols currently stands at over $74 billion, a significant increase from just over $1 billion in mid-2020.
3. DeFi protocols are built on public blockchain networks like Ethereum, BSC etc allowing for anyone with an internet connection to participate in the financial ecosystem.
4. One of the key features of DeFi is the ability to earn interest or yield on cryptocurrency holdings, without relying on traditional banks.
This is known as "yield farming" and has become a popular way to earn passive income.
5. DeFi also offers a wide range of financial services, including lending, borrowing, trading, insurance, and more, all accessible through decentralized applications (dApps).
6. DeFi is built on smart contracts, which are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code.
7. DeFi offers transparency and security, as all transactions are recorded on a public blockchain, making it virtually impossible to alter or delete.
8. However, DeFi is not without its risks, as smart contracts can contain bugs or be subject to exploits, leading to the loss of funds.
9. Despite these risks, DeFi has seen explosive growth and adoption, with more and more people taking part in this new financial system.
10. In summary, DeFi is an innovative new approach to finance that offers transparency, accessibility & a wide range of financial services.
It has the potential to revolutionize the way we think about money and banking, and is definitely a space to watch in the years to come.
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