In the DeFi space, one prominent component of the system is the idea of decentralized applications. Understanding Decentralized Applications (DApps) As of January 2020, the figure stood at a paltry $1 billion, which shows that the industry has become more trusted and respected by investors in the crypto space. The DeFi market cap stands at over $35 billion now, while the total value locked (TVL) in the space is also well over $20 billion. The industry, though still growing, has already recorded massive growth in the last year. DeFi can also be referred to as open finance. Here, the need for an intermediary is greatly diminished as DeFi technically uses "smart contracts" that are built on blockchain, which automatically looks to enforce any agreements in such contracts.įor want of a definition, let us say that DeFi uses blockchain-powered technologies to provide financial services across various niches without the limitation of central systems or human censorship.
DeFi essentially provides financial services like savings, loans, trading, insurance and more to practically anyone with an internet-enabled smartphone. While Bitcoin has already arguably had a Copernicus effect on our payment and financial system, DeFi also holds the same promise. This development is broadly known as decentralized finance, DeFi for short. But, lately, advancements made in the industry have birthed a new movement that has democratized financial services beyond a central authority or institution's regulations. In the past, when people thought of the crypto industry, many would assume it is just about Bitcoin and other crypto coins.
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