What is Decentralized Finance?

Defi:

DeFi is the abbreviation in English for decentralized finance -decentralized finance- DeFi Development company is used to name a financial ecosystem built on blockchain technology . Its main characteristic lies in the fact that it is the users themselves who exchange (supply and demand) assets and financial services directly among themselves, without intermediaries, to use them as an investment or financing mechanism.

How does DeFi work?

To understand how decentralized finance works, you must first understand the environment in which they operate. As we have already said, they use blockchain or ‘chain of blocks’, which consists of a network of participants connected to each other without the need for a central server and that is capable of transferring data and assets in a completely secure way and under the surveillance of the users themselves. In addition, DeFi operations are governed by smart contracts (intelligent contracts, in English), which are computer programs that also work with blockchain and that are executed automatically as the parameters that the parties involved establish in advance are met.

In other words, Defi Development Company decentralized finance uses blockchain technology to store and transfer assets digitally , ensuring compliance with agreements by all participants thanks to smart contracts.

What are DeFi for?

Taking into account that the concept of decentralized finance is still very recent, both its potential and the uses that can be given to it will depend largely on what the users themselves demand, in addition to the regulations that can be implemented in the future. At the moment, there are already individuals and companies that are investing and financing each other using DeFi applications as a bridge to connect supply with demand, and using blockchain as a guarantee of security for transactions.

What is needed to use DeFi?

An example of the use of a DeFi application is that of a user programming a smart contract to sell a number of tokens , such as cryptocurrencies , when they reach a specific price, seeking profitability. There is also the case of the user who wants to buy and prepares the smart contract to make the purchase automatically when said tokens are at the desired value.

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