DeFi-nition of the new branch of cryptocurrencies

Coins

The new Blockchain revolution

Decentralized finance, for our friends DeFi, represents a true development of blockchain. It replaces most traditional financial services through the use of smart contracts and blockchain technology directly on the Internet. DeFi owes part of its success to dApps, applications that differ from traditional apps in that they do not need to rely on centralized servers, but instead leverage blockchain platforms. The dApps offer financial products and services accessible to anyone, each exchange is entirely peer-to-peer, meaning no company or institution owns the platform.

The main features related to DeFi are: smart contracts and the use of decentralized networks. Smart contracts allow the automation of loans between individuals, while the use of decentralized networks guarantees a totally transparent, public and secure operation.

DeFi has developed in the Ethereum blockchain not only because of its innovative network using smart contracts, but also because it offers the possibility to issue new tokens, such as Token ERC-20 known as already well capitalized. Despite the fact that the first DeFi instruments have been widespread for a few years, it is only in 2019 that we start talking about decentralized finance. However, in the last period it is being given the leading role thanks also to the pandemic triggered by COVID-19 that brought a lowering of interest rates internationally.

In such an environment, DeFi offers potentially attractive returns for savers. In addition, the majority of the population is in possession of a smartphone, which offers the possibility of winning a large slice of the market, giving them free access to the world of finance. Surely the fundamental advantage lies behind these new financial instruments and the freedom they promise. This trend is heading towards an idealization of a freer financial system that could have a great impact on our daily lives. Would we be able to get used to this change? Will the climb towards these technologies see an end? What about the future? It is yet to be written.