This new system allows for transactions to occur without intermediaries such as banks, brokers, or other central authorities. It’s a peer-to-peer financial system that is run by smart contracts. Smart contracts are self-executing contracts that are programmed to automatically execute when certain conditions are met. They are trustless, meaning they don’t require the involvement of a third party to validate their execution.
DeFi is built on blockchain technology, which is decentralized and immutable. This technology makes it possible for transactions to be transparent and secure. Blockchain technology is also programmable, allowing for complex financial instruments to be created and used in the DeFi ecosystem.
Experts believe that DeFi has the potential to revolutionize the financial industry. They see it as a way to democratize access to financial services and reduce the role of central authorities in the financial system. According to a report by ConsenSys, a leading blockchain company, the DeFi ecosystem has grown from $1 billion in 2019 to more than $80 billion in 2021.
One of the reasons experts believe in DeFi is its potential to provide financial services to underserved communities. In many parts of the world, access to traditional financial services is limited, making it challenging for people to participate in the global economy. DeFi allows for financial services to be available to those who don’t have access to them through traditional channels.
Another reason experts swear by DeFi is its potential to reduce the costs associated with traditional financial systems. DeFi removes intermediaries from the equation, reducing the fees associated with their involvement. This makes financial services more affordable and accessible to everyone.
In conclusion, experts find DeFi to be the future of finance due to its transparency, security, affordability and accessibility. This new financial system allows individuals to access financial services without intermediaries, making it possible for people from all over the world to participate in the global economy. DeFi has come a long way in a short period, and experts predict significant growth in the years to come. It’s no wonder that the financial industry is taking notice of DeFi and treating it as a serious contender in the financial world.