The most prominent technology to emerge from blockchains is decentralized finance (DeFI). DeFi offers financial instruments without relying on intermediaries, utilizing P2P (peer-to-peer) transactions. Developed on public blockchains, primarily Ethereum, DeFi is challenging the current financial banking system, offering lower costs, higher speeds, transparency and an open market accessible to anyone with an internet connection.
Centralized finance (CeFi) platforms offer limited transparency and control to users. As such, users don’t have clarity or information on things such as where the yields are being derived from or - worse - if their funds are being mixed with operational funds, as the case with FTX.
The FTX implosion solidifies the necessity for DeFi. Transparency is key. All reserves, transactions, yields, and other valuable information on a DeFi platform are completely transparent and also independently verifiable by its users.
Today, DeFi is a $50b market with trading volumes of $2.5b/day. So far DeFi consists of stable coins such as Dai, decentralized exchanges (DEXs) such as UniSwap, decentralized liquidity and yield protocols such as Aave and Lido along with many other innovative projects emerging from this new technology.