What is DeFi

Decentralized Finance – or DeFi – is one of the most important aspects of cryptocurrency. DeFi is a term which is used to describe a specific subcategory of cryptocurrency, although it has also been used as a blanket term for cryptocurrency as a whole. In this article, we will define DeFi.

DeFi Basics

DeFi is a movement within the world of cryptocurrency finance, which is open to anyone who wishes to participate. The overall goal of DeFi is to replace the outdated financial intermediaries – which we deal with daily – by sublimating cryptographically designed algorithms in their place. These algorithms are called “Smart Contracts.”

Smart Contracts

Smart contracts are like the contracts which have traditionally been drawn out on paper for hundreds of years. The difference between smart contracts and traditional contracts is that smart contracts are 100 percent digital. Essentially, smart contracts are small, but highly important computer programs, which exist inside a blockchain.

Before smart contracts, the values which were held within blockchains existed only as wallet addresses. These wallets served the basic purpose of holding value for specific groups or individuals. To this day, there are many cryptocurrency platforms which still only serve this basic function. Ethereum was the first cryptocurrency project which broke this proverbial mold, by introducing smart contract capabilities to the world of cryptocurrency.

At the core, smart contracts are wallets which simultaneously facilitate three functions. They store rules, verify rules, and self-execute rules, without any need for human interaction. They are the cryptocurrency equivalent to vending machines. You put something in, and you get something out.

Dapps

Apps created on smart contract enabled cryptocurrency platforms – such as Ethereum – are referred to as “Dapps” or, Decentralized apps. Dapps are essentially the same as apps, the difference is, Dapps rely on smart contracts to facilitate their operations, instead of centralized databases. There are a wide variety of Dapps, which exist on various blockchains. Decentralized Exchanges, Liquidity Pools and Token/NFT minting make up a large portion of these decentralized applications, although Dapps can be created for a considerable number of use cases.

Understanding the Potential of DeFi

DeFi is one of the most important aspects of cryptocurrency, and the impact of DeFi increases daily. Some of the best performing tokens on the market are those which represent popular DeFi projects. You can take advantage of many of these DeFi projects by using Killer Whale Gain ETH! Be sure to check out the Killer Whale Products Page to find the Killer Whale products that are right for you!

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