DeFi generally refers to Decentralised Financing, a network of financial applications and software built upon blockchain technology. DeFi has no third party or centralised authority, unlike the traditional finance system. Instead, DeFi uses a peer-to-peer network to create decentralised applications that enable users to interact and manage their financial assets regardless of their status. As a result, DeFi strives to ensure that people worldwide have access to open-source and transparent financial services.
The three major functions of DeFi include; developing financial banking services, providing a peer-to-peer network for lending and borrowing protocols, and enhancing advanced financial tools such as decentralised exchange, tokenisation, and prediction markets.
DeFi lending takes place on lending platforms or protocols that provide cryptocurrency loans by permitting holders to stake their coins in DeFi lending platforms for lending purposes. A borrower can take out a loan via the DeFi platform, with the lender earning interest once the loan is paid back. The lending procedure is completed from beginning to the end without intermediaries.
User data across DeFi platforms are highly secured since they leverage blockchain technology and are built with smart contracts.
Total Value Locked in DeFi refers to the total of all cryptocurrencies deposited, loaned, or staked in a pool across a DeFi system. In simpler terms, the total amount of cryptocurrencies used to carry out financial activities in a DeFi.
No, Bitcoin is a cryptocurrency itself (a digital currency), while DeFi is a financial system developed to use bitcoin and other cryptocurrencies in its network.
DeFi aims to provide a financial system without third-party intermediaries involved in financial transactions.
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