Decentralized finance—often called “DeFi”—refers to the shift from traditional, centralized financial systems to peer-to-peer finance enabled by decentralized technologies built on the Ethereum blockchain. From lending and borrowing platforms to stablecoins and tokenized BTC, the DeFi ecosystem has launched an expansive network of integrated protocols and financial instruments.
Now with over $13 billion worth of value locked in Ethereum smart contracts, decentralized finance has emerged as the most active sector in the blockchain space, with a wide range of use cases for individuals, developers, and institutions. .
Whereas our traditional financial system runs on centralized infrastructure that is managed by central authorities, institutions, and intermediaries, decentralized finance is powered by code that is running on the decentralized infrastructure of the Ethereum blockchain. By deploying immutable smart contracts on Ethereum, DeFi developers can launch financial protocols and platforms that run exactly as programmed and that are available to anyone with an Internet connection.
The breakthrough of DeFi is that crypto assets can now be put to use in ways not possible with fiat or “real world” assets. Decentralized exchanges, synthetic assets, and flash loans are completely novel applications that can only exist on blockchains.
This paradigm shift in financial infrastructure presents a number of advantages with regard to risk, trust, censorship resistance, and opportunity.
From DAOs to synthetic assets, decentralized finance protocols have unlocked a world of new economic activity and opportunity for users across the globe. The comprehensive list of use cases below is proof that DeFi is much more than an emerging ecosystem of projects.
NOTE: Warning: DeFi is based on Ethereum, but it is not limited to Ethereum. Other blockchains, such as Tron and Binance, also support DeFi projects. Additionally, DeFi projects do not always guarantee returns and are subject to market volatility. Therefore, it is important to research and understand the risks associated with any DeFi project before investing in it.
Rather, it’s a wholesale and integrated effort to build a parallel financial system on Ethereum that rivals centralized services because it is profoundly more accessible, resilient, transparent, and efficient.
Asset management:
With DeFi protocols like Melonport and Dharma, anyone can launch a digital asset management strategy or fund. These protocols provide the tools and infrastructure needed to track portfolio performance, manage risk exposures, and comply with regulatory requirements—all without having to go through a traditional asset manager or custodian.
Compliance:
In traditional finance, compliance around anti-money laundering (AML) and countering-the-financing-of-terrorism (CFT) relies on know-your-customer (KYC) guidelines. In the DeFi space, Ethereum’s decentralized infrastructure enables next-generation compliance analysis around the behavior of participating addresses rather than participant identity.
These know-your-transaction (KYT) mechanisms help assess risk in real time and protect against fraud and financial crimes.
DAOs:
A DAO is a decentralized autonomous organization that cooperates according to transparent rules encoded on the Ethereum blockchain, eliminating the need for a centralized, administrative entity. Several popular protocols in the DeFi space—including MakerDAO, Compound, dYdX, Gnosis Safe Multisig—have launched DAOs to fundraise, manage financial operations transparently, and align incentives between users and protocol developers.
These are only a few examples for why DeFi based on Ethereum is becoming more popular each day!.
9 Related Question Answers Found
Decentralized finance—often called “DeFi”—refers to the shift from traditional, centralized financial systems to peer-to-peer finance enabled by decentralized technologies built on the Ethereum blockchain. From lending and borrowing platforms to stablecoins and tokenized BTC, the DeFi ecosystem has launched an expansive network of integrated protocols and financial instruments. Now with over $13 billion worth of value locked in Ethereum smart contracts, decentralized finance has emerged as the most active sector in the blockchain space, with a wide range of use cases for individuals, developers, and institutions. .
Ethereum is the most popular blockchain platform for decentralized applications (dapps) and smart contracts. While it is often associated with Bitcoin, Ethereum is much more than a digital currency. It is a decentralized platform that runs on blockchain technology, allowing developers to create dapps and smart contracts that run exactly as programmed without any possibility of fraud or third party interference.
IPFS (Interplanetary File System) is a protocol and network designed to create a decentralized file system. It is a content-addressed, peer-to-peer hypermedia distribution protocol. IPFS is built on top of the existing infrastructure of the Internet and leverages the power of cryptography to provide security and integrity.
VeVe is a decentralized platform built on the Ethereum blockchain that allows users to buy and sell digital assets. The platform is designed to be user-friendly and offer a variety of features that make it an attractive option for those looking to invest in digital assets. The team behind VeVe has a strong belief in the power of blockchain technology and its ability to disrupt traditional financial markets.
Decentralized finance, or “DeFi,” is a hot topic in the cryptocurrency space. Ethereum is the most popular blockchain for DeFi applications, with over $13 billion worth of value locked in Ethereum-based DeFi protocols. But what exactly is DeFi?
Decentralized finance, or “DeFi,” is a hot topic in the crypto world these days. From yield-bearing protocols to flash loans and everything in between, this relatively new sector of the industry has taken the crypto community by storm. But with all the excitement around DeFi, one question still remains: is all of it built on Ethereum?
Decentralized finance, or “DeFi,” is a catch-all term for the various financial protocols and platforms built on Ethereum. These protocols and platforms provide a wide variety of financial services, ranging from lending and borrowing platforms to stablecoins and tokenized BTC. While DeFi protocols and platforms have been growing in popularity in recent months, there are still a number of challenges that need to be addressed before they can be widely adopted.
There’s been a lot of talk about Braintrust lately. Some people are convinced that it’s the next big thing, while others are skeptical. So what is Braintrust, and is it built on Ethereum?
Quorum is a permissioned blockchain platform that is based on Ethereum. It is designed to meet the needs of enterprises that require high levels of security, privacy, and performance. Quorum is developed by JPMorgan Chase and ConsenSys.
