Decentralized Finance, commonly referred to as "DeFi", is the broader term for financial software built on the blockchain.
In practice this includes digital assets, financial smart contracts, protocols, and decentralized applications ("DApps").
What is DeFi?
• Trustless, decentralized, autonomous and uncensorable.
• Financial engineering for crypto assets.
• Trade tokens, futures contracts, synthetic assets, perpetual swaps, etc.
• Assets are tokenized in standard ways (ie: ERC-20 Standard), so applications mesh from a UI standpoint for the end user.
• For example, tokens borrowed from Compound can be used to provide liquidity on Uniswap or lent out on AAVE.
• Globally accessible, anyone with an Ethereum wallet can participate.
• Examples: Compound, Sushiswap, Uniswap, Badger, IDEX, Kyber, dYdX, Synthetix
DeFi Market Evolution
• As the broader digital asset industry has surpassed $1.7T in total market cap, a new, digitally native financial industry has emerged, in large part to service the enormous amount of capital held by early crypto investors.
• Similarly, to how the internet ushered in a new information age, the technological underpinnings of blockchain technology will usher in new financial infrastructure.
• Many product offerings of the traditional financial system have been replicated in the digital world, offering more economically sound and frictionless experiences to the end user.
• Since many of the platforms offering these products are deployed on an open-source network like Ethereum (with no gatekeeper), this new financial infrastructure has been referred to as "Decentralized Finance" ("DeFi").
• DeFi platforms are decentralized, autonomous, and feature automated market making technology with no centralized order book (examples include: Uniswap, SushiSwap & 0x Protocol).
• Most users are crypto founders, developers and consumers, institutions have yet to arrive!
Proper DeFi exposure requires allocation across a variety of different Blockchains.
Ethereum is a decentralized, open-source blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. After Bitcoin, it is the largest cryptocurrency by market capitalization. Ethereum is the most actively used blockchain.
Binance Smart Chain uses dual-chain architecture to empower its users to build their decentralized apps and digital assets on one blockchain and take advantage of the fast trading to exchange on the other.
Solana is a fast, secure, and censorship resistant blockchain providing the open infrastructure required for global adoption.
Polygon is a protocol and a framework for building and connecting Ethereum-compatible blockchain networks. Polygon combines the best of Ethereum and sovereign blockchains into a full-fledged multi-chain system. Polygon solves pain points associated with Blockchains, like high gas fees and slow speeds, without sacrificing on security.