What is DeFi?
DeFi (Decentralized Finance) is a blockchain-based financial system that offers services without intermediaries (like banks).
Here are its key points:
1. Various financial services
• Loans and borrowings via crypto collateral.
• Token exchanges on decentralized platforms (DEX).
• Generation of yields via staking and yield farming.
2. Technology used
• Based on smart contracts, which automate transactions without a trusted third party.
3. Advantages
• Accessible to everyone with a crypto wallet.
• Fast, transparent and borderless transactions.
• Returns often higher than traditional financial services.
• Volatility of cryptos.
• Bugs or hacks in smart contracts.
• Uncertain regulation.
DeFi is transforming finance by making it more open and innovative!
Investing in DeFi-related cryptos can be interesting for several reasons:
DeFi is one of the fastest growing sectors in crypto, with growing global adoption. Investing in DeFi projects is like betting on the future of decentralized finance.
Some DeFi cryptos allow you to generate passive income through staking, yield farming or by participating in lending/borrowing protocols.
DeFi cryptos are often used at the core of financial applications (lending, exchanges, stablecoins, etc.), which gives them intrinsic value linked to their adoption.
Portfolio diversification
They allow for the addition of a different asset class, potentially offering high returns, even if the crypto market is volatile.
Advantages of decentralization
Investing in DeFi means supporting a transparent system, open to all, without intermediaries, and resistant to censorship.
Exposure to financial innovations
DeFi is constantly innovating (e.g. DEX, algorithmic stablecoins), which can provide unique investment opportunities.
However, it is crucial to carefully analyze each project, because the risks (volatility, hacks, regulation) remain high.
