Will Decentralized Finance be the digital economy of the future?
Decentralized Finance or DeFi has been one of the most striking events in the world of cryptocurrency. Every DeFi application currently runs on Ethereum, which is, by market capitalization, the second-largest cryptocurrency network. With Ethereum, you get more than just a digital asset through which you can make blockchain transfers. You will have access to an ecosystem through which you can not only provide services and perform complex tasks. These functions are what laid the foundation for DeFi. Now, DeFi has become the market response to the freedom of financial services, regardless of geographic location and social status.
The best part about using DeFi is the fact that there are no middlemen involved in the financial processes. In the case of centralized finance, there is an intermediary like a bank, a brokerage office, a stock exchange, a settlement center, etc., that lends confidence to the transactions. They also perform other important functions like storing and moving the fundings, lending to organizations and individuals, etc.
In the past year, the DeFi market’s capitalization has increased by almost 60 times and has reached $130 billion. The total value locked (TVL), value of user deposits, has increased 100 times as well, reaching around $100 billion. Even though several analysts predicted its decline, DeFi has managed to withstand every problem, all thanks to the underlying network. During the spring of 2021, Bitcoin and other crypto assets’ cost came down because of an overload of transactions. However, even with this, DeFi has managed to grow, which proves that it will be the digital economy of the future