Decentralized Finance - Emerging financial system
Decentralized Finance - Emerging financial system

By CryptoArgha | Crypto Argha | 10 Oct 2019

Blockchain is adding a new level of growth in each sector and also emerging as a key player in the tech field  

In recent years blockchains decentralization feature has attracted everyone and gave birth to new new ideas  

Among those ideas -One is Decentralized finance popularly known as Defi   

The idea of defi is still new but yet effective and growing faster than others  

The idea of Decentralized  finance   made famous by Ethereum blockchain based lending platform MakerDao but only as a Subset of a ecosystem  

Adding features like Decentralized Exchanges, Security Tokens, Lending Protocols and asset management

It can be build with a digital asset using blockchain but the Ethereum version of Defi is quite famous and also a major player in this field    



So what is Defi (Decentralized Finance)

 Its a module thats been built with convential tools  on ethereum blockchain  

They are basically build on open source network with moducular framework specially for creating and generating Digital assets on the chain  

The open source module helps to work on a public blockchain and desinged to work on stuff like censorship and improved financial services   

Decentralized finance module softwares  or Dapp usally works into a ecosystem by offering accounts linked with hydrid assets such as stable coins  

Which helps to use the assets on any intergated platform with blockchain security just by opening a account on the ecosystem 

Data entered are stored in separate blocks inside the ecosystem keeping it safe and separate  

The Ethereum blockchain helps to use those financial tools and allow to intergated in any platform   

This made the Ethereum version of Decentralized finance (defi) module more famous also gave birth to few famous and sucessful startups like  MakerDao and Dharma  

So, now discuss about few key features that Ethereum blockchain Based Defi Offers  


Decentralized Lending   

The idea of Defi became famous because of few key features and Lending protocols is one of them  

Recently the Ethereum based Defi attracted alot of attention for Decentralized digital asset such as Dai and Lending protocols with liquidity graph pool like Dharma  

The Decentralized open lending protocols gives numerous advantage over traditonal financial services such as  

1) intergated platform protocol to add on any platform. Making it easy to use on the financial service built on it  

2) Lending and borrowing of digital assets on Decentralized ecosystem 

3) Instant Transction Settlement  

4) lowest fee stracture

5) Digital assets as collateral   

6) No credit checks   Open protocols are restricted to use on any public blockchain like Ethereum blockchain itself   

Thats why the Ethereum blockchain version of  Defi is so popular for Its financial Tools  


  Investing And insurace

 Investing is always a risky matter without proper research or taking the right decission anyone can lose money but if the platform your using to invest isnt safe than thats a major upset  

The Decentralized ecosystem helps to invest with blockchain safety by keeping data and asset both safe and secured  

Decentralized crypto backed insurace platforms are major players now   

Platforms host a open hydrid digital asset with security and built with law also known as Security tokens  

Where regulations and flexiable security both works at the same time on same chain   Decentralized insurance platform  like polymath and harbor provide all the framework along with tools and tokenalized securities  

They work same as broker and dealer and sometime as custodian too provide both price feeds and risk managements   Platforms backed by blockchain is increasing rapidly for insurance and management frameworks    


  Decentralized prediction Markets  

Lottery , lotto and prediction are the easiest and riskest way to double up funds instantly  but without high end security its useless too

  Decentralized prediction markets are more complex part of open finance but it offers enormous potential 

  Last year Ethereum based blockchain firm Augur launched a prediction fanfare market   It works as a censorship market based on Ethereum working with digital asset augur   Prediction market is a famous tool for spreading the risk by speculating on any event or sport   

For making prediction we use broker or gambling site to place the bet on any event with fiat currency 

  In Decentralized  prediction market prediction digital assets work as the place bet and asset  

While most people like to place bets or prediction online increases the danger of getting hacked or scammed  

In decentralized market prediction module theres nothing to worry as the prediction market will be built with blockchain and predictions will be placed with digital assets 


      Decentralized Exchanges (Dex)  

News like Bithumb hack or cryptopia hack might scare you but theres nothing to tension about while using a decentralized Exchange (Dex)  

In open Decentralized  Finance exchanges are widely known as Dex.   

Dex are p2p (peer to peer) exchanges that opens encrypted protocols on blockchain to trade digital assets under the ecosystem    While using dex traders can use blockchain financial tools like plugin crypto assets and wallet that connects with main or cross chain blockchain   

For encryption and decentralization dex are more safer than normal or traditonal exchanges   

Adding multiple blockchain made financial tools and keeping third party extensions away   Dex have some cool features like atomic swaps and cross chain asset transfer protocols that allow to move one blockchain assets to another one  

Currently Idex is the most popular Dex dapp and etherdelta has been in the mainstream news for a while now  

Having a decentralized module along with all financial tools dex are peoples favourite place to trade digital assets  

  Conclusion   Well, its too early to say good about anything but its sure that defi (Decentralized Finance ) has alot of potiential to grow in the future  

Currently its in the early stage and alot of features and development are yet to made   

However the features, tools and security provide by Defi are remarkable and it will surely get mainstream attention in future        


Hi I am Argha. I write Blogs and Article Related to Cryptocurrency, blockchain and Technology

Crypto Argha
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