Gate.io Blog Decentralized Finance - | DeFi |: A Technology That Challenges Centralization

Decentralized Finance - | DeFi |: A Technology That Challenges Centralization

03 August 13:31

Meaning

DeFi stands for 'Decentralized Finance'. It is a technology that provides various financial services with blockchain technology without centralization. DeFi is producing various types of decentralized financial products through the activation of distributed networks and open source software (OSS). A distributed network is a network that is run by several interconnected individual devices rather than a single main computer. It is a framework that does not require trust like blockchain. Users have full control over their assets. In addition, they participate in the DeFi ecosystem through P2P and DApp.

Case

Decentralized finance offers many advantages compared to centralized finance. The use of blockchain’s distributed ledger and smart contract makes it possible to provide more secure services for financial applications and financial products. For this reason, various DeFi DApps are currently being developed. DeFi's features can be classified into 3 categories.

- Issuance of Stable Tokens

- Providing a platform for P2P Trading and Liquidity Pools

- DEX(Decentralized Exchange)

From these 3 features, various types of DeFi service cases were born. Examples include DApps for lending protocols, software development tools, index funds, sub_script_ion services, data analytics, and more. Many financial business models continue to be converging with the DeFi protocol.

Decentralization

DeFi is a technology that challenges centralization. If centralized finance mismanages the ledger, our assets can disappear. DeFi is one solution to that problem. DeFi will have a huge impact on the world going forward. With DeFi, anyone can use financial services regardless of nationality, gender, age, etc. Anyone can access financial services at low fees, free of centralization. We do not need to provide our personal information to others. Convenient access to all the financial services we want.

Editor YB(Gate.io Korea, Marketing Agent)'s Comments

Now, DeFi is rapidly growing the market. Many developers are decentralizing their existing financial business models. The power of DeFi is spreading around the world. In the future, we will be able to move away from centralization, reduce unnecessary spending and protect privacy.

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