What are the Benefits of DeFi (The Role of DeFi)

What are the benefits of DeFi? Editor’s note: This article is from 8btc (ID: bitcoin8btc) and written by Kyle. It is authorized for publication in the Planet Daily.

Decentralized finance (DeFi) is an emerging technology that provides a new alternative means of value storage and exchange for the cryptocurrency industry, while traditional banking uses smart contracts to manage funds, custody, and clearing institutions.

Due to the limitations of current blockchain technology, many applications of DeFi are based on the Ethereum network. Therefore, fundamentally speaking, it is a new service that combines traditional business models with decentralized digital assets, creating a more transparent financial system. What are the benefits of DeFi? What is DeFi? DeFi, also known as a Distributed Autonomous Organization (DAO), is a decentralized organization or company driven by the community. These entities typically maximize capital gains by providing their own financial products and services and rewarding other investors. This participation method is also known as “equity crowdfunding.” Although this project is very simple, it is complex and involves many risks. However, in reality, there are already many different protocols and use cases in DeFi protocols, including stablecoins, lending markets, etc. These protocols allow anyone to create their own unique tokens and adjust and combine them based on the desired quantity of products or services they need. What are the advantages of DeFi? First, you need to understand what DeFi is. It is an open platform built on smart contracts. Users can create their own tokens through this platform, and they can also issue tokens to different parties of liquidity (such as market makers). In addition, there are protocols that support the functions of smart contracts, such as automated interest rate tools, automated market makers, etc., without the need for a central counterparty. Therefore, DeFi has the following characteristics: 1. Secure, efficient, and reliable infrastructure. 2. Easy to integrate and leverage. 3. Trustless infrastructure. 4. Fully open source. 5. Seamless connection and sharing of all information, making it more flexible, easier to maintain and update.

The Role of DeFi

After the Bitcoin halving, DeFi also began to gain popularity.

In June of this year, the founder of Uniswap, Andre Cronje, announced the launch of a decentralized finance (DEX) platform. According to DeBank data, the platform has locked over 1 billion USD in deposits, meaning users can profit from DeFi protocols.

However, although DeFi project development is slow, it is still one of the most popular areas in the industry. With the launch of Ethereum 2.0, decentralized exchanges and other public chain ecosystems are also rapidly emerging, and their interoperability is being strengthened. The DeFi application scenarios continue to expand and grow. This has also led some people to believe that DeFi will be the next investment opportunity after Bitcoin’s explosion.

However, compared to the traditional internet, blockchain technology has not brought any substantial changes. On the contrary, the birth of blockchain technology has made people more optimistic about the future.

So what is DeFi? Simply put, it is an environment that provides developers with a permissionless, open, and transparent environment, allowing anyone to create and run smart contracts. In addition, individuals who interact through this environment can also have their own digital identities or assets, thereby building more flexible products and services. This will greatly help improve the security and efficiency of the entire network.

In the long run, large-scale usage cannot be achieved without decentralized trading systems or cryptocurrencies like Bitcoin. What is the core concept of DeFi? DeFi is essentially a trustless intermediary that allows everyone to securely access a variety of financial services without compromising personal privacy. Therefore, when we want to use a new platform, we need to understand how to use it. The primary purpose of DeFi is to use blockchain technology to help manage financial transactions, including payment settlement, loan collateral issuance, etc. The most important function in DeFi is to ensure that participants can directly contact and collaborate with each other. Due to the high scalability of blockchain, DeFi can facilitate easy exchange of information between different types of users without relying on third-party intermediaries, eliminating intermediaries.

The main characteristics of DeFi: (1) Trustless and user-friendly; (2) Strong security; (3) Good irreversibility. Since all users are at different stages, most users choose to use non-custodial wallets or cloud-based solutions.

DeFi also provides a fast and convenient way to complete daily transactions without the need for a bank account; (4) Support for multi-currency and multi-chain asset transfers, avoiding high costs and complex processes; (5) Cost reduction and business development promotion; (6) Solving regulatory issues.