What is DEFI Definition?
Decentralized finance therefore aims to create a financial system open to all and minimizes the need to trust central authorities , thanks to technologies such as the Internet, cryptography and blockchain. Technically, it refers to the union of all decentralized products and services like smart contracts, protocols, and applications.
So, if the promise of cryptocurrencies is to make money and payments universally accessible to anyone, regardless of where they are in the world, Token swap platform development the Decentralized Finance (DeFi) or Open.
Benefits of DeFi?
No authorization : DeFi system blockchains do not need authorization, allowing anyone to access applications on a DeFi protocol and trade on the network.
Accessibility – Anyone with a device like a PC or smartphone and a decent internet connection, from anywhere in the world, can join a DeFi network. This feature, in particular, certainly gives decentralized financial systems the advantage over traditional banking systems, as it takes into account that portion of the world's population that cannot access or use essential banking services.
Interoperability – DeFi is easily compatible with the integration of other applications, so you have the possibility to expand further, offer new services and even develop new financial markets.
Transparent and Open Source (open source) : The code is Open Source in a DeFi system. This means that the code is visible to every user and allows anyone on the network to control it and verify its security and functionality, without interfering with users' privacy.
DeFi Characteristics
• Thanks to its cryptographic techniques, it is a powerful and secure system.
• They have high levels of decentralization. That is, they act without a bureaucratic chain being imposed.
• They allow the user to act directly with the platform.
• Access to them has no borders. It can be done from any country in the world.
• They are highly transparent. Thanks to its free software, each line of code is auditable.
pros and cons
Like any technology, DeFi has advantages and disadvantages .
pros
- It allows millions of unbanked people to access financial services.
- It constitutes an opportunity to develop financially.
- With DeFi, international financing is much easier .
- They adjust to the needs of a target audience in order to develop investments.
- They create a new economic diversification .
- They are a point of economic development in the medium term , due to the advantages offered by cryptocurrencies.
Cons
- They still need to work on security , with the aim of making it more powerful.
- If a smart contract were to fail, so would the platform, as The DAO demonstrated.
- Given the volatility of cryptocurrencies , the protocols are still insufficient.
- If the decision to be made is not clear, this could lead to millionaire losses.
