Approximately $20.5 billion had been invested in DeFi as of January 2021. Decentralized means without having a need for intermediary central bodies such as brokerages, banks, or exchanges. DeFi utilizes smart contracts on blockchains instead of traditional financial instruments offered by central bodies.īy October 2020, more than $11 billion (in cryptocurrency) had been deposited in various decentralized finance protocols, representing a tenfold increase over the course of the year. “De” stands for “Decentralized” and “Fi” stands for “Finance”, put together, “DeFi” is “Decentralized Finance”. DeFi platforms utilize dApps to serve decentralized finance solutions. The operations that are controlled by central bodies in the traditional world are P2P in the crypto world and controlled mostly by dApps (digital applications or programs that exist and run on a blockchain or P2P network of computers). Finance suffers from the same problem as it depends hugely on central bodies such as banks, governments, and other financial institutions.
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To name a few, digital films and series are under the control of big studios or platforms like Netflix, or FMCG is controlled by few companies. In the traditional world, central bodies control various operations. One idea behind blockchain technology is decentralization and making applications run without having the need for central bodies. Please read our disclaimer on investment related topics before proceeding.
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