What is DeFi?

DeFi (Decentralized Finance) — this is a new financial system that works on the basis of blockchain technology. It allows people to access financial services without the involvement of banks and other intermediaries.

How DeFi works:

• Stablecoins. These are cryptocurrencies that are pegged to the value of real assets, such as the dollar or gold. They are used for exchange and trading in DeFi applications.

• Lending and borrowing. In DeFi, people can take loans secured by their cryptocurrencies or lend their assets as collateral to receive loans from other users. This allows them to earn income from their assets.

• Exchange and trade. In DeFi, there are decentralized exchanges where people can exchange some cryptocurrencies for others without the need to register and verify their identity.

• Insurance. In DeFi, you can insure your assets against various risks, such as theft, loss, or depreciation. This will allow you to receive compensation in the event of an insured event.

The advantages of DeFi include:

1. Decentralization. DeFi does not depend on a single control center, which makes it more resistant to censorship and manipulation.

2. Transparency. All transactions in DeFi are recorded in a distributed ledger that anyone can verify.

3. Availability.  DeFi is available to anyone who has an internet connection and a cryptocurrency wallet.

4. Low commissions. There are no intermediaries in DeFi, so transaction fees are usually lower than in traditional financial systems.

5. Innovations. DeFi is constantly evolving and offers new financial services such as derivatives, synthetic assets and tokenization of real assets.

However, DeFi also has some risks associated with the volatility of cryptocurrencies, the lack of regulation and the possibility of hacker attacks. Therefore, before you start using DeFi, you need to carefully study all the risks and take measures to reduce them.

In general, DeFi is a promising direction for the development of financial technologies. It can become an alternative to traditional banks and other intermediaries, giving people more freedom and control over their finances. However, like any new technology, DeFi requires a careful approach and understanding of all its features.

For a more in-depth study of the topic, it is recommended to refer to additional sources of information.