The decentralization aspect of DeFi is not only a dispersal of power but also a dispersal of risk.

These entities can freeze your assets, and you are at the mercy of their hours of operation and cash reserves. To an extent, banks and other financial institutions have power over your funds.

“Finance” is easy to understand, but what is “decentralization?” In short, decentralization means that no chief body controls something. DeFi often harnesses open-source code, allowing anyone the opportunity to build on pre-existing applications in a permissionless, composable manner. Decentralized finance’s ultimate goal is to challenge and eventually replace traditional financial services providers. Lending may have started it all, but DeFi applications now have many use cases, giving participants access to saving, investing, trading, market-making and more. DeFi, however, expands on those qualities, adding additional capabilities.Ī subcategory within the broader crypto space, DeFi offers many of the services of the mainstream financial world in a fashion controlled by the masses instead of a central entity or entities. Many of the initial DeFi applications were built on Ethereum, and the majority of the ecosystem’s total value locked (TVL) remains concentrated there.Īt its core, Bitcoin ( BTC) carries qualities touted as pillars of decentralization. More specifically, DeFi consists of smart contracts, which, in turn, power decentralized applications (DApps) and protocols. One such niche is the decentralized finance (DeFi) sector, which was created as an alternative to traditional financial services. The crypto and blockchain space boasts different niches in which projects and companies develop solutions for various use cases. After Bitcoin’s launch in 2009, a robust industry blossomed, stemming from the asset, its concept and its underlying technology.

List of all defi coins