What Is Decentralized Finance?
What is DeFi?
DeFi means Decentralized Finance. Simply put, decentralized finance are products and services that aren’t under the control of a centralized body (like a bank or government). Instead, DeFi applications conduct transactions via the blockchain and are governed by token holders.
DeFi began in 2014, with the aim of removing the middle men in financial transactions and allowing investors access to the growing crypto market. Today, there is $52.3 billion locked in DeFi and the growth has been exponential.
How is DeFi different from traditional finance?
Blockchain data doesn’t ‘belong’ to anyone, it is public and accessible to everyone, regardless of where they are and who they are Whereas traditional finance is run through intermediaries like banks that are linked to other systems. Instead the blockchain is operated by the users. For example, with Oasis.app you can open a vault and borrow Dai straight into your wallet whenever you want. That means that DeFi apps, run on the blockchain, are not subject to centralised organisations.
Faster, simpler and full of opportunities
DeFi apps cut out intermediaries like banks and governments and therefore make transactions faster, simpler and often cheaper. DeFi apps built on these networks can put technology, efficiency and security at the forefront of what they do, for the benefit of users.
Investing in crypto and DeFi is similar in lots of ways to traditional systems but with a few twists that many think make it even better. Yield farming, for example, is similar to staking but offers the investor an opportunity to lock the value of a crypto currency to generate rewards (blog post coming soon).
What about security?
DeFi offers investors exposure to the crypto market in many different ways. In fact, it’s the driving force for blockchain and crypto for investors. Because the way into the DeFi investment opportunity is through Dapps, such as Oasis.app, it’s important to use a platform that’s trusted and reputable, as well as to be aware about security best practices.
Blockchain was designed to be super secure, using complex technology to protect against hacks and fraud, through cryptography and transparency. FinTech that goes through traditional banking models can only be as secure as the traditional system itself.
However, not being any central entity behind, the access and security of your funds in DeFi are all in users hands. Users of Dapps (DeFi applications) access them with a non-custodial wallet which is made up of a public and private key. That private key is like the password to your account, but it can never be recovered or reset by anyone, and you should never share it with anyone. It keeps your funds secure, but it is only as secure as you make it. You can read more about security best practices in this blog post.
What makes Oasis.app DeFi?
Oasis.app mission is to provide the best and most trusted entry point to deploy your capital and benefit from all of the potential in DeFi. You can just connect your wallet, and borrow Dai by opening a Vault using your preferred crypto as collateral (such as ETH, wBTC, USDC, LINK and many more).
DeFi platforms like Oasis.app are reimagining the way access to financial products work - helping investors to unlock the potential of cryptocurrency, without having to deal with high costs and third parties.
Want to learn more about DeFi?
These concepts could be a bit complicated for the ones who do not work in this field or are not super passionate. But it is very important to reach and educate as many friends as we can for the industry to grow and scale, and to create the next financial future.
Sometimes, watching is better than reading. We recommend these two videos are very well made and explain in simple terms more of what you read above.
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2 July 2021