101: What is De-Fi?

What is Defi?

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These services are majorly built over Ethereum blockchain due to the programmable characteristic. Decentralized financial services focus on inclusion irrespective of the person enrolled with formal financial services such as a bank. This feature makes Defi capable of disrupting the traditional financial systems in the future.

Why De-fi?

De-Fi is controlled by no person or authority and everything happening is secure, transparent, and without any physical infrastructure in place. Sounds strange!? Defi services provide the flexibility to make transactions irrespective of time and geographical location. One might be sitting in India and sending money to the USA without interference from any bank, government, or external authorities. These transactions are secure and recorded on blockchain where they can’t be manipulated to commit any fraud.

Not just transactions but also decentralized loans and insurances are some possible services that we might see in the future. A decentralized loan would be much safer and easier to get unlike the loans provided by traditional banks involving a ton of paperwork and high-interest rate. Decentralized insurance would be found much more convenient as the insurance money would be easier to access and processing time would be cut down. For instance, for a health claim to approve, the processing time may cause a delay in treatment which can be prevented by the Defi services.

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How to build a De-Fi System?

Decentralized Infrastructure- Ethereum

Once we code these financial services with the help of Ethereum and launch those on the Ethereum network, they are no longer can be controlled by us. They become immutable which means they can’t be changed easily.

Decentralized Currency- StableCoins

Decentralized Services

The exchanges connect the buyers and the sellers in the crypto-space. This is a place where P2P transactions take place between the buyers and the seller without depending on a ledger for trade matching. Some of the famous decentralized exchanges in India are Zerion, PancakeSwap, and 1inch. (edited)

Decentralized Money Markets- Connect Borrowers with Lenders

Quite like traditional banking where borrowers take money from the bank, decentralized money markets connect the lenders and the borrowers directly eliminating the middlemen. It can be rephrased that you get the same interest on your lent token as the borrowers are paying back.

Decentralized Insurance- Platform to secure your assets

In case you lose your crypto assets, protocols like Etherisc are built to protect your crypto wallets from any mishaps. Not just crypto wallets but decentralized insurances are evolving to secure physical assets as well. Etherisc, for instance, is making insurance against flight delays, hurricanes, and even for a community.

Risks Associated

De-Fi is still in its infancy stage- You never what goes wrong

Some services aren’t completely decentralized.

You might want to do your research before jumping into the De-Fi System.

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