What is DEFI or decentralized finance?

DeFi refers to the English abbreviation the term ‘finance decentralized’, which is part of the ecosystem-based financial technology blockchain. The big difference with the traditional finance is that the users themselves are the ones that exchange assets and services between themselves, without the need of intermediaries. Have you heard this term in the environment of the criptomonedas? It can be said that it is a system for anonymous in which to complete the transaction using mechanisms fiduciary away from the traditional.

The popularity the DeFi began to spread a few years ago, although the germ of its origin dates back to the end of the year 2000, when they began to draw alternatives in the financial sector. Definitely, from 2020 it was when it was expanded widely use. It is evident that the applications of DeFi ecosystem of finance decentralized continue to be increased with the passage of time.

A fundamental aspect of DeFi is your global accessibility. The connection to the internet makes possible the participation in this paradigm financial. Is in constant evolution, and allows users to management in a variety of activities, from loans to exchanges decentralized, for example. To be a part of this environment, it is essential to understand the basic principles of blockchain, select platforms and reliable, as well as to understand the risks associated with fluctuations in the market. ¡Keep reading to learn more details in this article!

Free-form, eliminating intermediaries, are made to monetary movements, avoiding the increased costs and reduced profitability. To not deal with a centralised institution, working with established standards, users interact without relying on scores. In the DeFi protocols exist very open, non-personal and non-exclusive. There is also a wide variety of networks, among them, Ethereum, Binance, or Polygon. One of the pillars on which is based this ecosystem is the trust in which the contracts smart have a lot to contribute. In short, this is one more branch of the financial diversification.

The DeFi used an ecosystem of chain of blocks. In this context it is used digital wallets, contracts smart or digital deals. As part of an infrastructure that works with multiple computer networks, these serve as the books of public accounts by storing digital copies of all transactions. In this way, it is not necessary the intervention of traditional financial institutions, which have the functions of guarantor. The technology blockchain is that which protects the activity that is developed and allows you to maintain control of the movements.

Using a wallet or digital wallet sure you can perform all types of transactions, based on specific conditions. As we indicated, the applications DeFi have been created in the platforms of blockchain. Despite being in early stages of exposure, in comparison with the financial systems in centralized, are released constantly new applications.

In this process there is banks involved. There are pieces of code that are executed and act performing their functions. As you can see, this ecosystem has a high complexity. It is for this reason that the training is essential! In particular, our students Intermediate Degree Administrative Management, Management and Finance Certificate of Higher Education and Higher Degree Management Assistance understand the basic concepts to be able to advise other users. The creativity of the community of specialists in DeFi is providing alternatives to a broad range of financial products. Anyway, it is essential to be aware that DeFi are not for everyone. To perform safe operations it is necessary to use cryptographic technology to ensure each project.

The first thing you need to do to invest in a DeFi is to be formed. This is required to perform operations with discretion. It is very important to consider that there are movements that are subject to risks! To investigate the project, your team and your roadmap is fundamental to understand the functioning of any platform. In assessing the strength of the team, the underlying technology and the community that supports the project are all factors to consider. Transparency and communication are the other indicators of trust.

The understanding of this ecosystem dynamic is redefining the way we interact with financial services. There is a wide variety of assets, and their careful selection is the key. Understand the utility of each, as well as their quality is essential to make decisions about how to configure your wallet. A DeFi is a space in constant evolution! The ability to adapt to new trends and developments is crucial in this context. Keep up to date with the novelties of the market are essential practices to invest in taking informed decisions.

Diversify the portfolio is a common strategy in DeFi. To distribute the funds in various projects helps to reduce the risk associated with the volatility and any other type of adverse event. Despite this, it is necessary to be aware of the significant risks and potential losses. It is for this reason that understanding the broad spectrum of projects and services within this ecosystem is vital. In addition, to maintain a long-term mindset is essential, according to experts, because these markets are dynamic and can change rapidly. ¡Having an advanced knowledge on this topic you will be able to take decisions in a controlled manner!