An alternative financial system based on peer-to-peer payments on the blockchain called DeFi (decentralized finance) has been around for some time now. So what are investors getting out of it? DeFi’s goal is to empower investors to “become the bank.” They do this by giving them chances to lend money to each other and earn better returns. As an added convenience, digital wallets allow investors to send and receive money instantly from different locations across the globe. Moreover, they carry this out without having to pay for high fees associated with conventional banking. We’ll go over how Decentralized Finance works, what it can do for people, and how it threatens conventional banking. How DeFi works Financial services like loans, interest on deposits, and payments are all offered by DeFi — but these services will be provided via decentralized technology. DeFi, on the other hand, influences the industry. As a result of this, the financial products and services offered by DeFi can be delivered using the new infrastructure. To this, it uses a variety of techniques, including blockchain technology and smart contracts. For example, it is possible to record and trace back all transactions on a specific financial platform to a single source using blockchain technology. Think about it as a chronologically ordered log of all transactions on that particular blockchain. CEX.IO CEO Oleksandr Lutskevych explains, “The building blocks of...
