DeFi (Decentralized Finance)
DeFi is a shorthand term for decentralized finance. It is a cryptocurrency industry movement that aims to recreate traditional banking services without centralized technologies. While bitcoin itself is an example of DeFi, the term is applied mostly to that sector of the cryptocurrency industry that leverages smart contract technologies.
DeFi is implemented through dApps, which can be built on either a blockchain like Ethereum or a tangle like IOTA, although by June 2021 Ethereum had become by far the dominant technical platform. In early June, about $64 billion of the $100 billion then locked into DeFi applications was Ethereum. This amount ballooned from $1 billion a year earlier.
A website called defi.network, which was established by a group of DeFi-oriented startups, created what it calls an "Open Community of Decentralized Finance Platforms." The stated key principles of the group are interoperability, accessibility and inclusion, and transparency. Members of the DeFi network develop their software as open source projects to make it easier for developers working on other projects or companies to use each others software.
Among the members listed on its website are the derivatives platforms dY/DX, bZx and Market Protocol. Coinbase is also listed as a wallet provider, CDx as an insurance provider, Dharma as a crypto loans service, and Maker as a stablecoin.
Lending and borrowing cryptocurrencies is one of the most popular DeFi applications. A holder of cryptocurrency chooses a platform through which they lock their holdings.
- What are Decentralized Finance (DeFi) Applications?. Mycryptopedia.
- DeFi Is Helping to Fuel the Crypto Market Boom—and Its Recent Volatility. Wall Street Journal.
- DeFi Website. DeFi Community.
- What is DeFi?. DeFi Pulse.