Ever since the booming of cryptocurrency trend, alongside with the decentralized technology, DeFi is formed and it is also known as Decentralized-Finance and has been growing lately, so what makes it so great in the crypto market?
In the following shows DeFi relevant facts and information:
1. So what is Decentralized Finance?
First of all, Decentralized Finance allows customers to lend, trade and borrow assets in Decentralized Finance. The distributed financial databases records and verifies through the transactions. Nevertheless, utilization of blockchain technology also known as DeFi protocol to connect peer to peer in the network. Hence, utilization of smart contracts help remove the needs of unwanted third-parties compared to traditional financial services.
2. Advantages of DeFi
First, DeFi incorporates blockchain technology with finance, adding more transparency into financial service compared to traditional ones. This makes the transactions history is clear to users.
Next, everyone that has a smart-device with internet connection can use it.
Moreover, transaction process is faster since the process is in digital. A smart contract is all the system needs to allow users to apply for loans and zero human resource is required.
Above else, it does not only store wealth but helps create it as well. It works by allowing users to deposit funds for borrowers to lend then after a fixed time, interests will be the revenues for the lender.
3. Disadvantage of DeFi
After all, there are issues too, which is there is only one way to recover an account, losing or forgetting the private keys means losing the account.
Unfortunately, on the security side there have been cases exploitation in smart contracts. Implementation of DeFi platforms through an open-source smart contract is where hackers could seep the protocol of funds by exploiting the flaws in the existing program.
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