Decentralized Finance (DeFi) is an umbrella term for various applications and services within the world of blockchain, expanding the use of this technology and aiming to replace the traditional financial system with one that has no central authority.
Stablecoins act as a bridge between the worlds of DeFi and centralized finances, since they are matched to “real-world” assets. Smart contracts, decentralized applications (dApps) and blockchain technology are the backbone of the system. Various protocols and services exist and allow the users to interact with the world of DeFi. There are various solutions for DeFi tracking to monitor the assets. As an example, one can use a DeFi dashboard to manage and oversee their assets, investments and control their financial plans, thanks to an increased level of transparency.
A lack of intermediaries and distributed control over the system offers various advantages over the traditional solutions.
DeFi Advantages over Centralized Finance?
- No borders. As is the case with everything in the world of cryptocurrency, DeFi does not have geographical limitations. Anyone with access to the Internet and crypto wallets can theoretically interact with DeFi.
- Faster speed. A lack of intermediaries and borders, combined with the superior speed of the blockchain technology result in faster transactions and overall easier access to the services.
- Improved transparency. Another fundamental advantage of some of the blockchain solutions is clear transparency between all parties involved.
- Programmability. The flexibility of smart contracts can result in superior automated solutions, which in turn can be used to create new assets and financial tools.
- Interoperability. Another result of the system’s flexibility, this means that it is easier to make protocols and dApps to integrate and complement each other at a deeper level than that possible in the world of traditional finance solutions and services.
- Immutability. A decentralized system based on cryptography and data protection using the blockchain technology is pretty much immutable, which increases security and trust.
- More control. Since DeFi is permissionless, transparent and obviously decentralized, a single user has more control over their finances. There are various solutions to monitor their DeFi portfolio and DeFi statistics.