What is Decentralized Finance?
Decentralized finance (DeFi) are financial smart contracts, decentralized applications (DApps), and protocols built on Ethereum, that can be pieced together like a Lego.
Financial DApps are one of the hottest use case of Ethereum at the given moment.
Why use DeFi?
As the size and complexity of our economies grew, central authorities (i.e. governments, central banks, corporations) gained more power as more people placed trust in them. However we often have very little say in how corporations handle our investments, or even how our governments manage the economy.
DeFi aims to create a financial system that’s open to everyone and minimizes one’s need to trust and rely on central authorities. Technologies like the internet, cryptography, and blockchain give us the tools to collectively build and control a financial system without the need for central authorities.
What can you do with DeFi?
There are several use cases of DeFi:
– Lending – lend or borrow tokens and also earn passive income
– Decentralized exchanges (DEXes) – buy, sell, or trade cryptocurrencies or tokens
– Derivatives – trade nearly any asset using synthetic pricing
– Payments – transfer funds by using payment channels
– Assets – manage tokenized physical assets such as gold
– Prediction / Betting markets – bet on the outcome of any event
– Insurance – insure yourself by sharing risk with a community of people
How to get involved in DeFi?
– get a DeFi wallet and pick a DApp to use [guide]
– explore more resources on The DeFi List or here
– check DeFi explorers to get more data and learn about risks
– read this recommendations before investing in DeFi