What does defi mean

defi means decentralized finance.

Decentralized finance is a product of the combination of cryptocurrencies represented by bitcoin and ethereum, blockchain and smart contracts. Compared with traditional finance, decentralized finance has a stronger openness and inclusiveness: first, decentralized finance does not need to rely on any centralized body to provide credit intermediation or endorsement; second, there is no access restriction, i.e., anyone with a connection can enter.

Decentralized financial lending has three main models overseas: first, the peer-to-peer aggregation model, represented by Dharma, which locks in the borrower and lender through a smart contract; second, the stable coin model; and third, the form of a liquidity pool, where the borrower and lender transact through a pool of liquidity transactions rather than matching with a counterparty. In either case, the collateral is digital currency.

The core of decentralized finance is "decentralization". Decentralized finance provides financial services such as trading, lending and investing on the blockchain through the use of cryptocurrencies and smart contracts, but does not rely on any centralized financial institutions, intermediaries or trading venues. In other words, decentralized finance provides financial services similar to traditional financial services while achieving financial disintermediation.

Characteristics of Bitcoin:

Compared with fiat currencies, Bitcoin does not have a centralized issuer, but is generated by calculations of network nodes, and anyone may participate in the creation of Bitcoin, and it can be circulated all over the world, and it can be bought and sold on any computer connected to the Internet, and no matter where they are, anyone can mine , buy, sell or receive bitcoins.

Bitcoin is the first distributed virtual currency, where the entire network consists of users and there is no central bank. Decentralization is the guarantee of bitcoin's security and freedom. Bitcoins can be managed on any computer with Internet access. Anyone can mine, buy, sell or receive bitcoins, regardless of location.

Manipulating bitcoins requires a private key, which can be kept isolated on any storage medium. No one can access it except the user himself. Bitcoins can be wired for free, but eventually a transaction fee of about 1 bitcoin cent will be charged for each transaction to ensure faster execution. As a means of payment from A to B, Bitcoin has no cumbersome limits on the amount and procedures.