Since the beginning of 2019, DeFi has become a long-term hot topic in the blockchain field. Looking back on this year, the development of DeFi has brought a great impact on the blockchain ecology and financial market. So what is DeFi and what does its arrival mean?
Before understanding the importance of DeFi, let's first understand what DeFi is. It comes from decentralized finance in English, DeFi is the abbreviation of this phrase, if the literal translation is "decentralized finance". But in fact, it is more appropriate to call "distributed finance" or "open finance", because in essence, there is no complete "decentralized" finance, and most of them are centralized and decentralized to varying degrees.的合。 The combination. However, DeFi has been established by convention and is more suitable for spread.
So specifically, what is DeFi? It generally refers to encrypted assets, financial smart contracts and agreements based on smart contract platforms (such as Ethereum). These assets, smart contracts and agreements can be combined like Lego, so they are also called "currency Lego."
The essence of finance can be condensed into: the exchange of utility and risk in time and space. In theory, all services and products provided by decentralized finance are the same as in the traditional financial world. In the traditional financial system, financial services, including financing and investment, savings, credit, settlement, securities trading, commercial insurance, and financial information consulting, are all provided by centralized financial institutions for users. However, DeFi uses distributed ledger technology, including blockchain, cryptocurrency, and smart contracts to provide services such as loans, financing, stablecoins, and credit arrangements.
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