What is the difference between decentralized finance DeFi and traditional finance? What are the better DeFi platforms now?

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Almost every supporter of encryption start-ups has a trend to use the decentralized value of blockchain technology to promote their business fundamentals.

In this article, we will explain the difference between decentralized financial agreement business and traditional business:

We will mainly discuss two aspects:

1) What is the real meaning of defi?

2) What are the types and main differences of 2)DeFi platform?

DeFi guide

Users of traditional financial systems often hope to build a system that is easier to enter, more transparent, lower in transaction costs and less dependent on intermediaries. In order to establish such a fairer financial system, banks, loans and derivatives must undergo fundamental changes. In addition, decentralized ecosystems, such as DeFi, need to be adopted. It promotes p2p lending, eliminates centralized control and provides financial freedom for users.

Recently, there has been a lot of discussion about DeFi in the field of cryptocurrency. It provides financial services to the whole world: loans, derivatives and other products. Moreover, the role of traditional financial intermediaries has weakened and even failed to play a role. Supporters of the decentralized financial system believe that DeFi is a good substitute for traditional loans. Some people call it the future of lending.

DeFi is built on public blockchain such as Bitcoin network and Ethereum. It has become one of the "core driving forces" of Ethernet. By using an unlicensed distributed network, DeFi platform transforms financial products into untrusted protocols that can be accessed by anyone anywhere in the world. People who don't have a bank account can also borrow loans and assets with the DeFi solution and trade with financial instruments.

Open source platform provides users with great benefits, including transparent and cheap cross-border transactions, no credit check and less censorship. Anyone can engage in financial activities because there is no geographical restriction.

Degree of dispersion of DeFi

In recent months, the number of DeFi solutions has surged. Their models are different, and their dispersion degree is also different. Compared with other models, some DeFi models have poor dispersion. This is because only a few of their components are dispersed, while the rest are still controlled by the company.

The formulation, management, price supply, determination of interest rate, provision of margin liquidity and start-up of margin are the key components of DeFi agreement. They determine the degree of decentralization.

If the number of decentralized components is large, then the DeFi protocol is more decentralized than other models. Such an agreement will enable users to completely control their digital assets and get rid of centralized control. So far, no DeFi protocol has dispersed all components.

Each DeFi protocol assigns a category according to the number of dispersed components:

central finance

DeFi solutions are usually unmanaged, which means that users can control their own funds and be responsible for their security. Instead, it is CeFi trusteeship. The central system keeps user assets and is responsible for ensuring the safety of user funds.

When it comes to loans or borrowing, users can't control any aspect of funds. The interest rate is determined by the central government, and the liquidity of the extra margin is provided by the central system or authorities. CeFi products are supplied at a centralized price, and it is also allowed to initiate margin recovery. Thank you very much for your patience. Please adopt it if it helps. Wish you a happy life! thank you