Decentralized finance
Decentralized Finance (DeFi)is a way to remove the middle man in your finances and use decentralized "nodes" instead. If there are multiple sources to use in lending, borrowing, buying, and selling, using credit or collateral, then your finances are decentralized. This term is frequently used in cryptocurrencies, and it is the phase after ICOs, IEOs and security token offerings. Instead of offering securities, the companies in this field let anyone create computer nodes around the world and carry the whole transaction history, in the form of a distributed ledger. The main difference between simple transaction ledgers and DeFi is that in DeFi, the collateralized debt position (CDP) lets anyone borrow against their collateral, which is usually in the form of Ethereum (ETH) or BTC (bitcoin).
DeFi can also be used to exchange cryptocurrency via decentralized exchanges, or DEXs. Typically, an exchange is an actual company, such as Coinbase or Bittrex, but a decentralized exchange is an exchange that is comprised of and owned by the network's stakeholders (or token holders). Rather than being a centralized corporation with a headquarters, the exchange is a decentralized collective of individual users. An example of a decentralized exchange is Uniswap [1]
References[edit]
- ↑ "Uniswap Protocol". Uniswap.org. Uniswap. Retrieved 30 September 2021.
https://en.wikipedia.org/wiki/Ethereum https://en.wikipedia.org/wiki/Bitcoin https://en.wikipedia.org/wiki/Node_(computer_science)
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