Can DeFi become mainstream finance and offer an alternative system?

DeFi or decentralized finance is a blockchain-powered finance ecosystem that behaves the same as traditional finance but is not regulated as the latter. Decentralized finance exchange is a purpose-built finance exchange where decentralized finance like cryptocurrencies is bought and sold without the intervention of intermediaries. With the highest potential, DeFi can benefit us in recreating a new finance system.

Could DeFi liberate finance?

Best depicted by a Cryptocurrency exchange development service provider, decentralized finance can offer a system where customers are able to access financial products directly on a decentralized blockchain network. Evolution can bring in the best of everything, and finance is no exception. With decentralized finance, every need of a crypto user can be satisfied without the involvement of intermediaries like banks or finance institutions.

As mentioned earlier, decentralized finance is totally unregulated and gives no control to the governing authorities or bodies, and this form of financial transaction allows anyone in the world to lend, borrow, send, and trade digital assets through easily downloadable digital wallets without using banking services. There are chances that DeFi can liberate finance, as it allows or enables two parties to transact securely and directly without the involvement of an intermediary or a central authority.

What are the possible benefits of DeFi?

Decentralized finance exchange of digital assets takes place according to two fundamental qualities – transparency and permissionless-ness. The decentralized finance ecosystem lets you unlock liquidity and growth opportunities with the integration of a standardized economic system.

·         Highly programmable: Decentralized finance work according to the pre-set parameters that are fed into the smart contracts. These programmable smart contracts can automate financial transaction execution and create a new form of financial instruments and digital assets.

·         Immutable transactions: Security and auditability of financial transactions increases, as the data remains tamper-proof across a blockchain’s decentralized architecture.

·           Fungibility: The DeFi protocols and applications are developed to be more fungible which helps in integrating and complementing one another, and the developers provide the flexibility to build on existing protocols, customize interfaces, and integration of intermediary applications.

·        Highly transparent: As all the transactions are happening on a blockchain network and is broadcasted and verified by other users, the level of transparency increases around data transactions. In a decentralized network, the protocols are built with open-source code and the activities are made available to any network user allowing them to view, audit, and build on requirement.

·         Zero approval: As with traditional finance which requires permission to execute transactions, DeFi is permissionless. This provides the opportunity to handle and execute financial transactions through a crypto wallet and a strong internet connection. DeFi applications can be accessed from any part of the world and there are set rules to bind with in terms of funds required.

Offering the best of unregulated transactions, Decentralized finance transaction is on the rise for providing a secure, transparent, and an efficient alternative to the traditional finance system. If implemented the right way decentralized finance can eliminate the need for centralized finance institutions.