Decentralized Finance or Open Finance refers to offering financial services on a blockchain network. It recreates the conventional financial system without any middlemen in the process. There is no authority wielding control over your money. Decentralized finance mainly operates through DApps and smart contracts. Some of the popular DeFi platforms are Dharma, Compound, Echo, AAVE, Balance, Uniswap, BlockFi, Synthetix, and MakerDAO.
Its main features are permissionless, open-source, and transparency. DeFi can be applied in many ways like lending, borrowing, Stablecoin development, processing payments, insurance, and decentralized exchanges.
The advantages offered by Decentralized Finance or Open Finance
It ensures more inclusive access to the basic financial services especially for the unbanked sections of the population.
It facilitates the faster and cheaper cross-border transfer of funds with a special focus on remittances made by foreign workers to their families.
It offers a higher level of privacy and security without the presence of intermediaries.
It ensures frictionless transactions and is also resistant to any form of transaction censorship.
Despite being in the development stage now, DeFi’s characteristics make it suitable to use in the current economic landscape. It saves both costs and time for users and can revolutionize the global financial sector in the near future.
