Advantages of DeFi

The innovation provided by decentralized finance has many advantages over the traditional system, which relies on intermediary institutions such as banks and courts that provide arbitration.

Next, we will discuss each of the main advantages of the DeFi ecosystem.

No central authority

Decentralized finance offers the possibility of removing intermediaries from financial operations and instead, they propose consensus protocols that work without the need to be controlled by a central authority or a trusted third party.

There is no KYC

Defi allows its users to lend and borrow from each other, without using the same procedures as traditional finance. In the absence of a central authority, KYC (Know Your Customer), credit scores, etc. are not used.

Liquidity without borders

Defi is non-custodial, so its users keep full control over their money and can use it however they want. They can access the market from anywhere and at any time, as long as they have Internet, and dispose of their funds as they wish.

Accessibility and interoperability

Dapps from the DeFi ecosystem can be integrated with other platforms without requiring authorization. This means that a platform can create a new feature and then other dapps can integrate it into their product without asking for permission.

This interoperability gives people control and autonomy over their funds, making trade and investment accessible and allowing anyone to carry out transactions at any time and from anywhere.

Security

Since DeFi financial services are deployed on public blockchains , single points of failure are eliminated.

Transaction data is recorded on the blockchain and spreads across thousands of nodes, making censorship or hacking a very complicated and expensive task.

Low cost

Because the traditional financial system is based on generating profits for the intermediaries who control them, its services can be prohibitive for people with low incomes.

On the contrary, with DeFi costs are significantly reduced allowing all individuals to benefit from a wide range of financial services.