What is DeFi (Decentralized Finance)?

 Decentralized finance, or also known as DeFi, is one of the most popular things in the blockchain and crypto space. Fundamentally, decentralized finance takes existing financial products and services such as trading, lending, and borrowing, and puts them on the blockchain. By moving these financial products and services on the blockchain, the central authority is removed from the equation.

But not all of these financial services offered on the blockchain are entirely decentralized. Some of them are still offered by centralized companies. These centralized companies are operating on smart contracts so that they can offer it on the blockchain. However, these centralized companies still don’t have much control and impact over your funds, compared to the traditional centralized authorities, like banks and governments.

Some suggest that decentralized finance should be called “non-custodial” finance as it is a more accurate term. Non-custodial means that you still hold the keys to your crypto, not needing to hand them over to any intermediaries. With DeFi, you have complete control over your crypto while your transactions are being carried out through smart contracts.


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