What is DeFi?
DeFi (Decentralized Finance) refers to peer-to-peer financial instruments built on a blockchain network. Blockchain networks like Bitcoin and Cardano introduced cryptocurrency, which challenged and changed our ideas about money. Now we are venturing into the next chapter of blockchain - questioning the role of institutions like Visa, Paypal, or Wells Fargo. DeFi seeks to migrate financial instruments like loans, bonds, stocks, futures, ETFs, etc to the blockchain. These tools could eliminate our need or change the role of Wall Street intermediaries like brokerages, exchanges, and banks.
With DeFi you can swap cryptos, put up your crypto for others to borrow, or take out an instant loan against your crypto holding. There’s also limited experiments with derivatives, Wall Street versions of futures or stock options in the US.
DeFi is a financial marketplace; like any marketplace, it offers products. By definition, there is no central authority creating and controlling these products. Instead, any user with a blockchain wallet may provide either the products or the funds needed for things like loans or trading. This is possible because…