Decentralized Finance

Regal Wallet Banner

Decentralized finance (DeFi) is the direct trading of financial instruments between users using smart contracts on a blockchain. DeFi exchanges allow users to trade, borrow and lend cryptocurrencies. Some DeFi exchanges offer staking systems. Users can earn interest on their crypto by participating in staking. The decentralized finance market has a market capitalization of more than $100 billion.

Decentralized Finance

Centralized exchanges use order books to match buyers and sellers of cryptocurrencies. Examples of centralized exchanges are Coinbase, Binance, and Huobi. Decentralized exchanges only use smart contracts. This enables users to trade cryptocurrencies peer-to-peer, without the involvement of a third party. Most decentralized exchanges use the Ethereum blockchain. 

Disadvantages of Decentralized Finance

The disadvantages of decentralized finance are that it relies on smart contracts to work, which can be faulty. Added to this, blockchain transactions are irreversible. This means there is no way to intervene when an incorrect or fraudulent DeFi transaction takes place.

Advantages of Decentralized Finance

The advantages of decentralized finance are that it nullifies exchange fees and increases the privacy of users. The code behind decentralized apps is open-source. This means everyone can see the code and improve it. 

Business24-7 aims to help those interested in cryptocurrency make safe and informed investing decisions. We are dedicated to offering our readers unbiased reviews of leading cryptocurrency exchanges for traders at all levels. Cryptocurrency exchanges are included in our reviews if they are safe, liquid, regulated by proper authority, or decentralized. 

All trading involves risk. More than 80% of investors lose in spread bet and CFD trading. As these complex instruments allow for the use of leverage, there is a high risk of losing more money than you have deposited. Before attempting to participate in spread bets and CFDs, consider how well you understand them and if you can afford to lose your money.

Previous articleDecentralized Application
Next articleDfinity
Stefan Grasic (Dipl.-Jur) is the World Wide Director of research for Buisness24-7 and has considerable experience in the financial and investment niche, but also enjoys writing articles for the general readership. Stefan is an active Crypto, Forex and general investment researcher advising blockchain companies at their start up level. He keeps fit by mountain biking, surfing, skiing and lots of other adrenaline sports.


Please enter your comment!
Please enter your name here