How DeFi is Changing Finance: Become Your Own Bank Today
TL;DR
- Decentralised finance (DeFi) transforms financial services by tokenising real-world assets, enhancing liquidity, and enabling continuous lending marketplaces.
- Individuals can now manage their finances independently, acting as their own banks without relying on traditional financial institutions.
The traditional banking system faces significant challenges, including systemic risks and reliance on central banks, which can jeopardise depositors during liquidity crises. The failures of banks like First Republic and Silicon Valley Bank highlight these vulnerabilities. In response, DeFi emerges as a solution, allowing for the tokenisation of assets and the creation of always-on lending marketplaces.
Tokenisation enables real-world assets, such as real estate and bonds, to be represented digitally, enhancing liquidity in DeFi lending markets. With $BTC and $ETH as quality collateral, smart contracts facilitate transactions without third-party intervention. This innovation allows individuals and institutions to leverage diverse tokenised assets for borrowing, broadening access to financial services.
DeFi protocols provide continuous marketplaces for lending and borrowing, operating 24/7. Users can lend assets like $BTC and $USDC while earning yields, with plans to incorporate more tokenised assets in the future. Unlike traditional finance, DeFi's transparent smart contracts mitigate systemic risks by ensuring clear collateral management.
One of DeFi's most significant advantages is empowering individuals to become their own banks. Advanced wallets enable secure asset management, allowing users to hold value in stablecoins and invest in digital assets without relying on traditional banks. This independence offers unprecedented control over financial futures, free from the risks associated with conventional banking.
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