Introduction to Defi

In an evolving world, the Financial sector is also undergoing major changes, changes that are driven by the innovations introduced within the world of cryptocurrencies. Among these, Defi certainly deserves a near and additional look.

Decentralized finance is a new approach to the use of financial instruments that infrastructures such as the Cardano Blockchain, where the absence of hierarchy allows less centralization than the traditional banking system.

The development of Defi within crypto projects has given way to the structuring of a new concept of finance where there are no longer a few banking players able to control intermediaries, making them democratic and shared.

At the base of these new developments, there is a technological innovation capable of managing transactions without the intervention of a guarantor.

What is DEFI?

Defi Decentralized Finance is an innovation introduced within the world of cryptocurrencies whose purpose is to make classic banking services independent from the intermediaries of a hierarchically superior body such as Banks. This new approach aims to exploit the internal automatisms of Blockchain technology, such as smart contracts, to validate transactions with economic value and more.

Therefore, Defi is based on blockchain or very similar systems. There is also no Top-Down hierarchy, as in the traditional financial system. It is based on automatic execution contracts that do not involve intermediaries. Defi moves very important capital and is constantly growing, representing a fertile ground for all those investors who believe in the potential of this technology.

There are already many applications in the Defi area: from the token exchange to that of digitized assetsup to automatic execution loans.

How does decentralized finance work in this current time:

It aims to offer infrastructural support via blockchain to different types of services.The functioning of decentralized finance is based on a few and fundamental points.Among the services within blockchain projects based on the Defi concept, the most important is certainly the one concerning the exchange of value, which is Token.

For example, the newest projects that aim to establish themselves in this specific niche, offer the possibility of connecting directly or through supporting blockchains other blockchains to each other, offering payment and transaction services.

Another Defi-related service is the ability to execute “ smart contracts ”. A smart contract is an algorithm that can go into execution when certain conditions are met and that contains a contract within it.