How DeFi is Revolutionizing the Financial Sector

Decentralized Finance (DeFi) has experienced significant growth; with its overall value of assets deposited in transactions pegged at over $200 billion at this time last year, from the $700 million recorded in 2019, its adoption is increasingly gaining popularity around the world.

First, what is DeFi?

A DeFi system can be understood to be a financial application built on blockchain technology that offers trustless, decentralized services. These applications can include decentralized lending and borrowing, as well as the ability to trade assets on a decentralized exchange. In other words, it is the shift from traditional, and centralized financial systems to peer-to-peer finance enabled by blockchain technology.

The origins of DeFi can, however, be traced to the creation of Bitcoin, which introduced the concept of decentralized, and peer-to-peer money. The success of Bitcoin in this regard has inspired other projects in the cryptocurrency space.

It is noteworthy to state that the emergence of Ethereum and its smart contract blockchain functionality was a crucial development in the evolution of DeFi. Smart contracts enable parties to enter into agreements without the need for trust. These contracts, which are simply computer programs that execute when specified conditions are met, make…