Why Ethereum is a very Popular DeFi Blockchain?
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What is DeFi?
Decentralized finance is a system that uses the capabilities of the Ethereum platform to structure transactions. This particular category of financial services uses technology to reduce dependence on central authorities and relies upon a decentralized ledger.
The DeFi blockchain supports smart contracts; this technology permits automatic and enforceable agreements. These DeFi protocols are precise code lines that use online blockchain technology to replace intermediaries like banks, accountants, and lawyers.
DeFi Is a Significant Trend
The growth of decentralized finance has accelerated in recent months. The total volume of decentralized finance has grown from about $2.5 Million in 2017 to more than $6 Billion in 2020. The growth of decentralized applications opens new opportunities to do business in an efficient and low-cost manner.
Decentralized Finance Increases Access
Access to banking has been a barrier for millions of persons residing in areas with few or no banking services. Some new protocols allow users to transact to acquire cryptocurrency and use it to trade or exchange for things of value. This method of financial interaction does not require banking. Globally, a leading cause of chronic poverty is the lack of access to banking. Further, where banking may be available, the major third party may decline access applications. Decentralized finance applications may open the benefits of enforceable agreements to anyone with a smartphone.
Innovation is the engine of decentralized finance, and the governments that regulate finance and cryptocurrency have not kept pace with the rapid pace of development. The lack of regulation offers an opportunity for developers, businesses, and investors to develop unique solutions.
Decentralized Finance Applications
DeFi applications are flexible, and users can combine them to achieve their finance and investment objectives. The benefits of decentralization can also work with mainstream institutions. Large banks and financial companies have increased interest and participation in innovative financial technology solutions.
The growth of decentralized applications demonstrates the usefulness of blockchain and cryptocurrency. Many industries have adopted blockchain into their database processes and record keeping. Decentralized finance uses blockchain to achieve a wide range of autonomous transactions.
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