Here’s What You Need to Know About Decentralised Finance
The decentralised finance movement encompasses applications and protocols based on blockchain technologies, such as Ethereum and Solana, with programmable capabilities. Smart contracts, which include the agreement of the deal, enable the transactions to be carried out automatically on the blockchain. Studies indicate that decentralised finance has only captured 5% of the crypto space, but it has seen massive growth recently that may lead to this level of reach increasing in the near future. In June 2021, DeFi assets in the crypto market were worth $93 billion, up from $4 billion in the space of just 3 years.
One of the reasons blockchains are so difficult to attack is they are decentralised. Since no one party controls the blockchain network, it is almost impossible for someone to change the rules governing it. Even if a government manages to shut down a bunch of computers, bitcoin continues to function because other computers on the network not only keep a record of transactions but can run the system on their own.
DeFi organisations are decentralised in the way they make their decisions. When a decentralised application first begins, only one person or a few people might drive the project; however, as the project gains momentum, they often step aside, handing control to the community that uses it, which helps to retain validity and avoid problems arising. Decentralised autonomous organisations (DAO) may be formed to carry out this transition, which would have its rules and regulations embedded in program code and could issue governance tokens to give holders of those tokens a say in decision-making.