“Technology “is not only changing existing markets, it is expanding the scope of markets"
Diaz-Rainey, Ibikunle, and Mention (2015, p.277)
Introduction
In the days of old, financial services depended largely on centralized intermediaries such as banks, brokers, stock exchanges or insurers. However, technological advancement has brought a new chapter in the world of finance, replacing centralized finance systems with decentralized finance systems. (Defi) with these new developments, financial services do not have or any more base on intermediaries such as banks, stock exchange or insurers. DeFi is a realization of the Fintech trajectory’s dream that one day more organizations will gain access to financial areas that were previously reserved to licensed financial institutions, and that inclusivity, transparency and improved risk management should characterise financial flows and trade. (Mention, 2019). We are the posterity that is living that dream.
What more can we offer to our own posterity than a future better than the one we inherited?
Unlike in the days of old where one had to depend on traditional financial institutions, DeFi has made it possible for any customer irrespective of his or her residence to trade(place the purchase order for a digital asset or token) giving that person title for that assets. It operates on smart contracts in which contracts are executed between the seller and buyer, no middle men, no regulation, no censorship.(Schueffel, Groeneweg, & Baldegger, 2019) compare it to normal trade. One walks into a shop, orders for what he wants, gets it first hand.
ETHEREUM AS A DEFI PROJECT
After Bitcoin, Ethereum protocol has become the most popular technology used by Defi. (Chohan, 2021)Ethereum uses Ether as it’s original currency used on its network. The Ethereum network records transactions(transfers—credits and debits) across national, regional and international boarders. In literal sense, opposed to fiat, Ether is digital money stored and used through block chain accounts instead of bank accounts. This digital currency can either be sent to some one or some other address. Let me use mobile money to explain this, some one sends money from one phone number to another by just using a USSD code. The only difference here is that mobile money is regulated, and goes through intermediaries, banks and agents, call, them brokers. This is not the case with Ether. It can also be used to run smart contracts.
Ether compared to Fiat
Just like a dollar is made up of cents, the Ether is also accessible in smaller ‘cents’ denominations. Thus the standard unit is termed Gwei. Thus 0.00000001 ETH is 10 gwe, just like 0.10 USD is 10 cents.
Accounts – Wallets
Accounts under DeFi are more of digital addresses were Ether tokens can be transferee to and stored. (Schueffel et al., 2019).The owner named in the address directly has possession of the digital assets in the said address) Ethereum runs on smart contract accounts and wallets. Smart contracts run as programmed, peer to peer, no intermediaries, cannot be regulated, interfered with in anyway or censored.
Smart contracts Accounts
Contract accounts are accounts used in smart contracts. Each of them has its own address controlled by a code. Wallets: These addresses are generated and managed by a software, which is the wallet(digital wallet) This make it possible to receive, hold and store digital assets.
