What is DeFi?

by Brad Welch

What is defi platform malaysia?

DeFi refers to financial products and services that are available to anyone who can use Ethereum – that is, anyone with an internet connection. The markets are constantly open with DeFi, and there are no centralised authorities to block payments or deny you access to anything. Services that were previously slow and vulnerable to human error are now automatic and safer, thanks to code that anyone can inspect and scrutinise.

 

How is defi different from finance in the traditional sense?

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With defi, you are the one that has a hold on your money unlike with traditional finances where its companies that hold your money. With defi, it’s you who has control on how your money is spent while you have to put your faith in companies not to squander your cash such as through lending to untrustful borrowers with traditional finance. Defi promises that fund transfers can happen in a matter of money while it can take days through manual methods with traditional finance. With defi, the market is always open because the system doesn’t need to sleep while traditional finances result in market closures at certain times because humans need rest. Defi promises that its transactional activities are pseudonymous meaning fake names or aliases can be used unlike with traditional finances where one’s financial activities are right next to their whole identity. 

What can you do with it?

 

Send money anywhere in the world quickly

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Ethereum, as a blockchain, is intended for sending transactions in an extremely safe and worldwide manner. Ethereum, like Bitcoin, makes sending money around the world as simple as sending a text. Simply enter your recipient’s ENS name (such as bob.eth) or their wallet account address, and your payment will be sent directly to them in minutes (usually). A wallet is required to send or receive payments.

 

Access stable currencies

The volatility of cryptocurrencies is a problem for many financial products and general spending. The DeFi community has addressed this issue with stablecoins. Their value is fixed to another asset, usually a popular currency such as the US dollar.

 

Access to global funds

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When you use a decentralised lender, you have access to the funds accumulated from all over the world, not just those held by your handpicked bank or institution. This increases loan availability and lowers interest rates.

 

Borrowing with privacy

In today’s world, lending and borrowing money is all about the people involved. Before lending, banks must determine whether you are likely to pay back the loan.

Decentralized lending works without requiring either party to identify themselves. Instead, the borrower must come up with collateral, which the lender will receive automatically if the loan is not repaid. NFTs are even accepted as collateral by some lenders. NFTs are a deed to a one-of-a-kind asset, such as a painting.

 

DeFi is a free and open source movement. You can inspect, fork, and innovate on the DeFi protocols and applications. Because of the layered stack (they all share the same base blockchain and assets), procedures can be switched up to create new combinations.

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