Decentralized finance system

Decentralized finance system

Decentralized finance is a way of trading that offers financial instruments without depending upon intermediaries like brokers and banking. Defi is formed upon a blockchain trading system. Defi freed its clients from a third party. A Client can interact with the main company directly. People can get big advantages from online trading after getting skills in Defi procedures. An enthusiastic and highly capable person learns digital trading very fast and can earn money in no time. Mobile banking applications use Defi on the backend to offer financial services. Bitcoin is a form of money that does not need a bank or government. It can be transferred from anyone to anyone without the need of a bank government or any financial institute. It is decentralized money. Transferring money is the first step of the building block in a financial system. 

We use different ways of online trading aside from sending money for example loans stock markets and saving plans. Today’s financial system has some in charge centralized system to look upon all the trading outcomes. But this system has its own risks and dangers like mismanagement fraud and corruption. Defi is the term given to financial services that have no centralized system or any kind of in charge upon them. We can build financial organizations exchange lending services and insurance companies that are uncontrolled by anyone or a decentralized financial system like cryptocurrency. To create a decentralized financial system we need an infrastructure to run the program and decentralized services. Etherium is a platform that provides an infrastructure to run decentralized services and programs. it’s also known as decentralized apps or Dapps. With the use of etherium we can write smart contracts or automated codes that manage the financial services we would like to create. 

Building blocks of financial system 

Stable Money (decentralized) etherium 

Decentralized infrastructure system Ethereum 

Decentralized financial services

Defi application layer 

The application layer components consist upon smart contract (automated codes) back ends web3 Dapp fontends much like traditional web development is built on databases and user interfaces.

Smart contracts enforce the rules manipulate trades and securely handle funds when it’s time. There is no need to deposit funds into an exchange account before starting or conducting a trade. This will reduce the major hazard of hacking that exists for all centralized exchanges. A token is a form of data vital player in securing your application.

There are two types of tokens used in the application layer

  • Fungible tokens = All the same My Bitcoin = Your Bitcoin
  • Non Fungible Tokens (NFT’s) = Unique ownership rights, no one has the same NFT as me

Traders can swap one for the other in digital marketing. Fungible tokens are traded in automated market makers. The trader can move funds by the use of farming strategies and vaults to attain maximum yield. It is a programmed strategy. Defi is explained well in my article. Digital marketing and decentralized financial system are the ultimate trading procedures world is going to witness. Future belongs to those who have significant insight into the coming trends and scenarios. You should invest in a decentralized financial system and learn all the tactics of trading. It will bring prosperity and change in lives. 

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