Decentralized finance, or DeFi, is a new and exciting way to use money that is built on something called blockchain. It's like a big playground for money, where people can borrow, lend, and trade assets like gold or stocks in a more efficient, transparent, and fair way.
What is DeFi?
DeFi is a set of financial tools that can be used by anyone, without the need for a middleman such as a bank or a government. It's like a big group of friends who all get to play together and make their own rules.
Why it's special?
DeFi is special because it's built on blockchain technology. A blockchain is like a big book that records everything that happens in the playground. And just like how a book can't be changed once it's written, the blockchain can't be changed either. So that means that everyone's money is safe and no one can cheat.
Real World Use-Cases
DeFi offers a wide range of financial services, here are few examples:
Borrowing:
Just like how you can borrow a toy from your friend when you want to play with it, you can borrow money from someone else when you need it. And because DeFi is like a big computer program, you can borrow money from lots of people at the same time.
Lending:
Just like how you can lend your toy to your friend when they want to play with it, you can lend money to someone else when they need it. And because DeFi is like a big computer program, you can lend money to lots of people at the same time.
Trading:
Just like how you can trade toys with your friend, you can trade other things you own with people in the DeFi playground.
Why It Has Potential to Disrupt Finance World Today?
DeFi is more efficient, more transparent, and more fair than the traditional financial system because it doesn't rely on a middleman like a bank or a government. It also gives more options to people who might not have access to traditional financial services. It's like giving everyone a key to the toy box and let them play with it as they want.
DeFi is a new and exciting way to use money, and it's growing fast. Just like how you might want to try out different swings and slides in the playground, people are discovering new ways to use DeFi. And it's all possible because everyone gets to play together and make their own rules.