DeFi (Decentralized Finance)
Blockchain-based financial services operating without centralized intermediaries.
Detailed Description
DeFi (Decentralized Finance)
What is the primary function of DeFi?
DeFi aims to recreate and improve traditional financial systems using blockchain technology without centralized intermediaries.
How do smart contracts enhance DeFi?
Smart contracts automate transactions and enforce agreements, reducing the need for intermediaries and increasing trust.
What are some risks associated with DeFi?
Risks include smart contract vulnerabilities, market volatility, regulatory uncertainty, user error, and liquidity risks.
What distinguishes DeFi from traditional finance?
DeFi operates on decentralized networks, allowing permissionless access and lower fees, unlike traditional finance which relies on centralized institutions.
What future trends are anticipated in the DeFi space?
Future trends include increased institutional adoption, layer 2 solutions for scalability, integration with traditional finance, enhanced security protocols, and clearer regulations.