DeFi: Decentralized finance is revolutionizing the financial sector globally

The term DeFi emerged in 2013, coinciding with the creation of Ethereum. However, it began to spread and expand between the years 2016 and 2017, with the support of Ethereum on the one hand, and experts and entrepreneurs on the other hand.

Decentralized finance, also known by the abbreviation DeFi, represents a wide range of financial applications in the field of cryptocurrencies and blockchain. This is with the main goal of removing boundaries between parties within financial transactions.

The vast majority of decentralized finance (DeFi) applications are built on the Ethereum (ETH) network. The largest of these applications is MakerDAO. Which was founded by Rune Christensen.

Decentralized finance has evolved in recent years

The concept of decentralized finance is expanding very rapidly. Just as you would expect from a complete blockchain-based system. This type of technology is considered the solution to many problems facing the banking and financial sectors.

Some believe that this system is capable of replacing traditional financial systems in the future. Regardless of the technology or platform used, decentralized finance aims to eliminate intermediaries between the two parties in financial transactions.

Decentralized finance systems have proven over the past years that they are here to survive and grow. The total funds stored in its contracts reach $60.5 billion, according to DeBank.

Decentralized finance offers an easy approach to managing financial transactions. As its name suggests, it is not under the management of governments, and the changes applied to central financial systems do not apply to it.

This eliminates dependence on third parties, giving users complete control over transactions and allowing them to remain anonymous because all transactions are done via smart contracts through the blockchain.

Transactions and trading of cryptocurrencies can be carried out from anywhere because it provides financial inclusion.

What is the future of DeFi?

There are no clear guidelines to regulate this new financial method. However, a few countries around the world have begun to take action against it, since it eliminates the presence of intermediaries and hides transaction data.

On the other hand, since the DeFi field began to emerge, it has been growing continuously. It is also expected that this field will play a very important role in the future of the global economy.

It is expected that this method will suffer from many criticisms. The matter may lead to prosecutions. Its working method depends on cryptocurrencies and decentralization, which are technologies that most countries in the world do not prefer.