Decentralized Finance (DeFi) has become an integral part of the crypto ecosystem since 2020 when it took it by storm. Ever since, millions of investors have taken advantage of it to take their earnings to a new level and access financial services.
Unfortunately, many crypto enthusiasts remain unfamiliar with all the benefits the niche brings to the table. Sure, DeFi represents a great investment opportunity… However, its potential to change the world is much greater.
Historically, financial services have been reserved for the privileged despite technological advancement having made it easier than ever to access them. Unfortunately, more than 1.7 billion people around the world remained unbanked as of 2017, according to the latest Global Findex Database’s information published by The World Bank.
The centralization of traditional financial systems is the major factor in this lack of accessibility to traditional services. When financial institutions can veto people from accessing such services, profit and private interests can and will prevail more often than not. Is no surprise that banks have been the reason behind some of the biggest economic crises in history.
The cryptocurrency was created with decentralization in mind as a means to bring power back to its users. DeFi builds on this principle by using smart contracts to provide services traditionally offered by centralized financial institutions and platforms: Interest-bearing accounts, staking, lending, savings, trading, and much more.
As the DeFi ecosystem doesn’t have central authorities, their services can be accessed by any person who has crypto, the appropriate device, and internet access. This allows them to become part of the global financial market without relying on the approval of private institutions.
With over $85 billion locked in the DeFi ecosystem, platforms like Marker, Curve Finance, Aave, Uniswap, and Compound have become an important driver of financial inclusivity. Not only this but by offering complex financial services, DeFi platforms further expand the use cases and the potential of crypto as a whole.
For crypto investors, DeFi brings new forms of generating profit while facilitating access to financial services to third parties. Strategies like Yield-Farming and Liquidity Providing have become a major source of income for investors. By promoting participation in this way, DeFi platforms have created the underlying infrastructure for the financial system of the future.