DEFI ECOSYSTEM

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Overview

The definition of DeFi is a concept of a financial ecosystem living digitally on a shared infrastructure.

DeFi is an open-source economic framework with a specialization for the internet age on a worldwide scale.

• The decentralized finance world is made up of a multitude of decentralized, non-custodial financial products.
• They include decentralized exchanges, lending protocols and synthetic derivatives.
• DeFi is a highly experimental and risky niche within the wider crypto-currency space.
• Decentralized finance, or DeFi, sits at the white-hot center of the recent crypto bull run.
• On the other hand, Defi enables you to control and oversee your financial accounts. 
• It provides you openness to worldwide business sectors and multiple options regarding your regional currency or other banking alternatives. 
• The Decentralized Financial ecosystem can be described as the way toward building sheer monetary applications on top of the ethereum blockchain
• DeFi is the movement that leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries

Decentralized Finance

• Decentralized Finance or DeFi is a system that allows people to make investments, borrow money, send money abroad, and practically enables them to do anything and everything (related to digital money) without stepping out.
• DeFi can be thought of as a bank that conducts multiple operations but has no physical branches. It facilitates trading, simplifies the exchange processes, provides interest on investments and can do all of it without having a physical office and human employees. 
• This system of finance works on the decentralized blockchain network. The concept of DeFi is closely connected to cryptocurrency and blockchains. Interacting with DeFi simply means that you are interacting with a software. 
• A decentralized system can be a combination of blockchain and other open technologies. DeFi seeks to remove the middlemen involved in transactions.

DeFi Insights

• The DeFi movement refers to a specific genre of financial product that champions decentralization above all else, and uses lucrative incentive mechanisms to encourage investors to play along.
• As a concept, DeFi is a system of open, permissionless, and interlocking financial products. 
• In practice, DeFi is an overlapping network of dapps and smart contracts built on Ethereum with a focus on financial applications such as borrowing, derivatives, exchanges, trading, etc.
• The current largest and first major DeFi application is MakerDAO, which was founded by Rune Christensen.
• Prominent venture capital firm Andreeson Horowitz led multi-million dollar investment rounds in both Compound and MakerDAO–pillars of the current DeFi ecosystem.

How are DeFi applications produced? 

• Anyone capable of writing smart contracts is able to create DeFi applications. 
• InstaDApp was able to build a widely-used DeFi product by simply building a better user interface on top of existing DeFi products. 
• By making access to DeFi more user-friendly and simplified, they were able to cause a spike in other DeFi products and managed to raise $2.4 million in funding – all without asking for permission.

How do you use DeFi products?

• Anyone can use DeFi products by going to an application’s website and connecting with a MetaMask wallet or something similar. 
• Most DeFi dapps do not require users to give up any personal information or register, but ETH is required in order to pay for transactions on the Ethereum network.

What can you do with DeFi?

• Users can take out a loan or earn interest on stablecoins using MakerDAO’s Oasis app and Compound. 
• Tokens and crypto assets can be exchanged without registration or sign-ups on Uniswap and Kyber. 
• You can even buy tokens that automatically place trades for you using Set Protocol.