Do you know what DeFi is?
Let me provide some general educational content. Today we will take a superficial look at what DeFi is.
DeFi, or decentralized finance, redefines financial transactions by enabling direct fund exchange, borrowing, and trading between individuals via digital platforms.
Unlike traditional finance (CeFi — centralized finance), DeFi relies on algorithms and technology rather than regulatory bodies, offering autonomy, fast transactions, and low fees.
Its advantages include lack of control, easy access, and anonymity but come with risks like lack of support, potential scams, and protocol vulnerabilities. Panic in the market can trigger massive capital outflows, causing asset depreciation.
Caution is advised, as DeFi projects operate like pyramids — sustained by demand and participation — without these, they collapse. It means that if a DeFi project loses people's support or interest, it can become stranded, which can lead to decline or closure.
Approach DeFi with a clear head, understanding that rapid profits are unlikely, and always be aware of the inherent risks.
However, you need to work with any financial instruments with a cool head, you don’t want to lose all your savings, do you?
So always try to learn more about Web3.