DeFi is an ecosystem of financial services built on Blockchain technologies, typically using smart-contract. DeFi consists of applications and peer-to-peer protocols developed on decentralized blockchain networks that require no access rights for easy lending, borrowing, or trading of financial tools.
DeFi is built from 3 waves of blockchain innovation:
- Invented in 2009, starting with Bitcoin, brings distributed ledger/blockchain --> peer-to-peer transfer (P2P) & non-sovereign digital asset (non-sovereign)
- Defined by Ethereum, unlike blockchain, ETH's native programming language Solidity can be used to create an application, turning it into a globally accessible supercomputer.
- Coin boom 2017, marking the sponsorship of a series of dapp --> decentralized financial ecosystem
- The 4th wave is Defi, which is a combination of the 3 waves above
Two main criterias:
- Permissionless: server anyone, regardless of faction, no central authority
- Transparency: all documents can be inspected and reviewed because they are open source. Every transaction is recorded on a blockchain -> data discovery for investment or investigation
Related
- Blockchain
- defi-application
- decentralized-exchange
