How decentralized finance works - Jenco Tech



Decentralized services are created on the Etherium (ETH) blockchain, where financial services are accomplished by smart contracts. But what do smart contracts do? Here are some of them: 

  • Removes any intermediaries or middlemen from the equation. This means that transaction costs and fees will be lower. It will also lessen any delays in a financial transaction. With smart contracts, it is possible for parties to exchange anything of value without needing to go to a centralized institution. 
  • Solves the trust issue. In financial exchanges, there’s always a question of trust between parties. Someone must always take the first step, but this means that they are putting themselves at risk. Smart contracts fix this problem by only executing once all parties have done their part. 
  • Allows custom rule criteria. Smart contracts transactions are programmable. Users can create transactions that can only be completed if all the preset rules are fulfilled. 
  • Transactions are more transparent and secure. With smart contracts, the level of transparency is increased. Because of that, it is easier to trust other parties involved in transactions. All transactions carried out by smart contracts are recorded on the blockchain.

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