What is DeFi (decentralized finance), and why everyone talks about it

DeFi's need stems from the fact that financial services are not available to everyone worldwide. Almost 1.7 billion people worldwide have no means or access to financial services. Financial institutions also cannot provide the infrastructure necessary for people to have more access to money. The existing infrastructure is huge, but it lacks when it comes to reaching everyone.

With decentralization, current infrastructure failures are resolved. The point of failure is eliminated, and the logs can be stored and shared between different nodes on the network.

Let us find out more about DeFi in the following:

What is DeFi?

DeFi or Decentralized Finance is an alternative to traditional financial services. Relying on Blockchain technology and smart contracts, this platform came with the intention of updating, improving, and globalizing traditional finance.

One of the main advantages of DeFi is that it is not necessary to trust a central entity that guards your assets since everything is channelled through smart contracts automatically.

Furthermore, as it is an open-source protocol, anyone from anywhere in the world can build new financial products on top of existing ones and create new forms of value.

It is what many people come to call Universal Financial Services and that they would be offering for the first time basic financial access that cannot be censored. Just as Bitcoin cannot be.

Potential and future of DeFi Coins:

Finance 2.0 is here, and a bright future is being built with DeFi. In the future, Decentralized Finance (DeFi) will change the way how financial companies work. Crypto is driving financial institutions to take action for the future. They are now looking at blockchain and crypto as their next technology to solve critical problems within the financial sector.

For people, taking care of their finances is one of the most important things in life today. Searching for new forms of investment is somewhat complicated and even more so if you do not have someone close to you who understands market fluctuations. The trend in the world is to decentralize finance and it is quite a challenge. Therefore, DeFi is a trend in the crypto space.

Now, another key element of DeFi is decentralized applications (dApps). DApps allows financial institutions to create functional applications on the public blockchain and ensure that anyone can interact with them with minimal cost per interaction.

Why Ethereum will lead the next Bullrun?

As DeFi is getting more popular and it runs on the Ethereum network it will increase the usage of ETH. Here we will give you several reasons why Ethereum will lead the next Bullrun.

Ethers are becoming Proof of Stake:

Ethereum’s DeFi ecosystem is easily the most significant with the original smart contracts’ platform host to numerous DeFi applications.

The next major iteration of Ethereum will be based on a proof-of-stake (PoS) consensus protocol. It means that transactions on the Blockchain will be processed and validated by users who stake wealth as opposed to miners who expend energy.

Ethereum`s Proof of Stake date is set to be launched in 2020.

Scaling: 

Both scaling and Proof of Stake are bundled into an ambitious upgrade called Ethereum 2.0 that many envision to be finished in the next 4 years of Ethereum’s existence.

Eric Conner who is a founder product researcher of information site ETHHub said: 

“I think in 4 years, Ethereum will be moving past the hardest parts of its ambitious goals around proof-of-stake and scaling. At that point, the network will be able to onboard more users and we’ll start to grow beyond the use cases we are seeing today.”

Crypto experts and analysts believe that the Eth 2.0 revamp will transform DeFi and will trigger a massive bull run.

CEO and founder of Trustology – Alex Batlin highlighted that Ethereum 2.0 will have ripple effects that will go beyond simple price growth. He has highlighted the improved scalability of Ethereum 2.0 that could be used to support the adoption of DeFi by the general population.

In conclusion, there is surely a potential and bright future of DeFi. Once it has overcome the challenges of UX design and the trust of the masses, we will notice these protocols as an indispensable part of the Internet. 

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