Decentralized Finance (DeFi)

Decentralized Finance, more commonly referred to as DeFi, is a term that we have seen a lot of lately. DeFi coins are performing very well in the current market and are seen by some as the hype of 2020. Some examples are Chainlink (LINK), Aave (LEND), Kava (KAVA), Compound (COMP) or Synthetix Network Token (SNX) .

The fact that it performs well in the market is of course a bonus, but what is Decentralized Finance? Decentralized Finance (or simply DeFi) refers to an ecosystem of financial applications built on the blockchain. The term "Decentralized Finance" literally translates to decentralized finance, an open financial system. The DeFi movement aims to create an open-source, transparent financial ecosystem that is accessible to all and functions without a central regulator.

All this ensures that users remain in full control and that they communicate via decentralized peer to peer applications.

What are the benefits of DeFi?
DeFi has a number of advantages, the main one being easy access to financial services. The traditional financial world is completely managed by institutions such as banks and governments, which act as intermediaries. With DeFi, these middlemen become redundant. The code describes the resolution of any possible dispute and the users remain in control of their money at all times.

This saves a lot of time, so also a lot of money, and there is a virtually frictionless financial system.

Another major advantage is that "single points of failure" are removed, which means that there are no longer any central breakpoints in the network, as is the case with central servers. Instead, data is stored on the blockchain and distributed across thousands of nodes worldwide. This makes censorship or shutting down a particular service virtually impossible. People who do not have access to financial services in the regular financial world can also participate in the system.