What is Defi?
Defi is also known as decentralized finance. In addition, it is referred to as financial applications built on blockchain technologies, typically using smart contracts.
Smart Contracts: These are some of the most important features that bring uniqueness to Ethereum. Smart contracts are automated legal agreements that do not need any form of intermediaries for their execution and can be accessed by anyone with internet access.
Decentralized Applications (DApps): These programs work on a distributed peer-to-peer network without any intermediary. Anyone can have access to it via a web browser on a mobile phone.
Decentralized Exchange (DEX): allows users to exchange or swap tokens with other assets without a centralized intermediary or custodian. Example uniswap
What makes DeFi different from traditional finance?
- Reduces errors caused by humans: DeFi relies on written rules which are in codes called smart contracts. Once your smart contract has been sent onto the network, the DApp can operate independently with minimal human interaction.
- Transactions are transparent: Due to the decentralized nature of blockchain, smart contracts are essentially open-source, giving room for anyone to audit them, which increases the level of trust by users. Privacy is also retained because every transaction is untraceable (i.e., it is not tied directly to your real-life identity).
- It is accessible anytime and anywhere: DeFi and the DApps are limitless as they make it possible for people to have access to it anywhere in the world (i.e., borderless). Whether you are in Africa or Europe, you can enjoy DeFi services when you access the internet. It is essential to note that local regulations regarding digital currencies may still apply.
- No Intermediaries: DeFi does not need any authorization; this means that there is no need for a third party or lengthy forms to fill out. You can connect directly with the smart contracts from your crypto wallet.
- Flexible user experience: DeFi can be created or modified by anyone since it is “permissionless“. For example, smart contracts are like an open–source API: if you do not like the interface of one of your DApps, you can use an intermediary or even create your own.
The Inter Blockchain Communication protocol (IBC), the pillar of the Cosmos ecosystem, has been growing continuously in the past six months. Just this past month, over 1million transfers happened.
Cosmos‘ cross–chain network has continuously grown along with the project that runs on top of it reaching a major landmark in terms of activity.
In March, Cosmos launched the IBC to enable cross–chain decentralized finance and interoperable Non–Fungible Token (NFT) transfers. It has grown substantially over the past six months, enlisting new projects and blockchains into the ecosystem.
Other outstanding projects operating on the protocol include Terra, Band, Kava and THORChain’s Chaosnet.
