Introduction to Decentralized Finance

Abstract

Decentralized finance (DeFi) is a novel financial model, that uses the distributed ledger technology. It aims to offer financial services such as trading, investing, peer-to-peer borrowing and lending, access to fiat currencies, transfer of money globally, and managing insurance and credit services. Further, these services are offered without relying upon intermediaries like banks or other financial institutions. This leads to, both lower costs and entry barriers. On the other hand, as of today, there is no safety net for such activities. Therefore, its benefits should be balanced with its associated risks.