Decentralized Finance (DeFi) is based on public blockchains, which allow customers to conduct transactions with cryptocurrencies without the use of third parties, brokers, or banks.
DeFi covers all aspects of financial services and operations:
- lending;
- loans;
- cryptocurrency trading.
All Internet users can interact with the ecosystem and manage assets using crypto wallets and dApps.
1inch is a universal access point to decentralized finance with a large set of tools for fast and convenient currency exchange. She analyzes many rates on different exchanges like DeFi Swap and comes up with the best options.
Why Do We Need A DeFi Ecosystem?
DeFi is a peer-to-peer system of financial instruments. It provides decentralized finance and eliminates the need for intermediaries and lowers barriers to entry.
DeFi applications and various services are potentially useful for residents of countries with underdeveloped or unstable economies. Keeping money in banks is very risky. But customers can use the DeFi app and other similar services to protect and protect their savings. DeFi services are also in demand in developed countries, with particular popularity in the following areas:
- lending;
- investment;
- development of new models of obtaining passive income.
DeFi is a new step in the field of financial transactions, obtaining money in loans, investments, or lending. It helps to develop in a financial direction without the participation of third parties and control.
Features Of DeFi
The decentralized financial ecosystem has several features. The main distinguishing characteristics are:
- Decentralization and self-government.
DeFi does not have centralized governance structures. The rules and protocols for conducting business transactions are specified in special smart contracts. Users cannot make adjustments due to which the transparancy of transactions occurs. The DeFi app runs on its own. There is little or no human intervention.
Most DeFi applications have source code open for audit. This feature allows any user to control any transaction, make an audit, understand the contract functionality, and even identify a bug if there is one. Every transactional activity is public.
- Cross-border.
Most DeFi applications are a unique financial access point. It has no borders.
- Self-custody.
The DeFi ecosystem is inherently inclusive. Each user can create an application and use it for personal purposes. There are no dispatcher-controllers, and there is no need to fill out complex forms. Based on wallets, the user interacts with smart contracts and conducts the necessary transactions.
- Customized approach for each user.
New DeFi applications can be created by combining them with other products: stablecoins, decentralized exchanges, prediction markets, and other options. A certain structure can be assembled from various combinations. Clients provide themselves with the opportunity to create comfortable conditions for working with cryptocurrencies.
Benefits Of DeFi
Decentralized finance experts have identified some benefits. The main advantages of DeFi are:
- Decentralization is one of the main and important advantages. Control over each project is distributed evenly among many participants. Users can observe the absence of excessive regulation. All transactions are as transparent and fast as possible. Users are freed from a large chain of intermediaries when using DeFi. This feature is useful in many areas.
- Governance of DeFi projects is managed thanks to smart contracts and voting. It is these programs that establish the rules. They create clear rules for every transaction and more.
- The peculiarity of decentralized projects is to work on public blockchains. Data about each transaction is in an open soup.
Here are the main benefits that are typical for the DeFi ecosystem.
DeFi Profitable Farming
A user places cryptocurrency into a liquidity pool and earns rewards for this action. Tokens added to the pool facilitate swap transactions, with a portion of the swap fees being distributed as rewards to the liquidity providers.
Such encouragement is aimed at stimulating additional activity of users. Profitable farming contributes to the generation of passive income for users in the field of cryptocurrency.
Conclusion
Decentralized finance is a new step in the field of generating income from cryptocurrencies. The DeFi system is aimed at enabling users to carry out transactions without the participation of third parties. It allows you to get rid of bureaucracy and ensures the highest possible efficiency and speed.
They offer clients a wide range of tools and cryptocurrencies. Users can exchange, buy and sell coins, and receive passive income. A prime example is DeFi’s profitable farming. It is aimed at attracting new customers and liquidity the activity of users who already use the provided set of tools for transactions with coins.