What is DeFi? Overview of investment potential & opportunities in DeFi.

DeFi is a concept born in 2018, however, it was not until 2020 that it attracted the community’s attention. DeFi products have opened up a new world of financial services, where they operate entirely through the internet and the majority of value is maintained by users.
So what is DeFi? How is it different from the traditional financial market (CeFi)? What components does DeFi have? What problems and limitations is DeFi facing?

What is DeFi?

DeFi (Decentralized Finance) is a decentralized financial system in which financial institutions, services and products operate through smart contracts on a blockchain network. These services include: borrowing, lending, trading, payments, staking, farming…
The decentralization of DeFi allows users to have full access and control over their assets, while eliminating the control and management of centralized authorities (banks, exchanges, regulatory agencies). Countries… to move towards open finance.

The nature of DeFi

In essence, DeFi operates on the infrastructure of the blockchain platform. Therefore, it inherits all the properties and benefits that blockchain technology brings, including:
Decentralized: DeFi is not controlled or interfered with by a third party, instead, transactions are executed thanks to pre-programmed code in smart contracts on the blockchain.
Distributed: Transaction data in DeFi is authenticated and stored in the system of nodes globally. This helps ensure the correctness of transactions and the security of the system.
Transparency: All transaction data performed and source code in smart contracts are public, allowing anyone to access and inspect relevant information.

Open & Permissionless: Users are allowed to create their own DeFi applications or participate in using available services via the internet without having to provide any personal information.
Anonymity: The only information users need to share in DeFi is the wallet address (or public key). Additionally, they do not need to carry out identity verification (KYC) requirements as in the centralized model. This helps ensure the anonymity and privacy of DeFi users.
Self-custody: In the DeFi market, users have full control over their assets and cryptocurrency wallets through encrypted private keys.