Five Important Things to Know About Defi

Share post:

DeFi made headlines weeks ago with the theft of more than $600 million in cryptocurrency from the Poly Network.

Here are five things to know about DeFi.

    <li>DeFi stands for decentralized finance. It uses blockchains and cryptocurrencies to provide bank-like services such as saving, lending, borrowing and trading, without the use of intermediaries. Smart contracts replace brokers, stock exchanges, banks and other traditional financial institutions.</li><li>Most DeFi apps run on Ethereum’s blockchain. A smart contract executed on the blockchain enforces the rules of the deal. The risk associated with using a DeFi app is based on the technology. If the code fails or is hacked, a user could lose money.</li><li>Interest rates are better.</li><li>Many contracts have a precaution that states that they get something if a user does not repay. This is usually a hiding place of cryptocurrencies, but it would also be NFTs. As a lender, the volatility of these collateral is important to consider. It could be worth 150% of the loan at execution and 1% until the user requires it.</li><li>There is no bank manager to grant the account, there is no regulation and no external insurance. While there are versions of insurance within the DeFi systems, they all have the same risks as any DeFi app. There is also no government agency or FDIC to help when a user loses money.</li><li></li>

For more information, view the original story from TechRepublic.

Featured Tech Jobs


Related articles

Seattle software engineer ignites viral debate on employee loyalty with LinkedIn post

A Seattle-based software engineer, Alex Nguyen, recently ignited a significant debate on LinkedIn with a post that celebrated...

AT&T has nationwide service outage

AT&T's nationwide service outage, which disrupted the ability for many customers across the United States to place calls,...

Intel splits into two hoping to become world’s second-largest chip manufacturer

Intel's CEO Pat Gelsinger announced a major reorganization, splitting the company into two independent entities under the Intel...

US supports Japans ambitions to return to leadership in chip manufacturing

Japan has embarked on a monumental $67 billion initiative to reclaim its stature as a global semiconductor titan,...

Become a member

New, Relevant Tech Stories. Our article selection is done by industry professionals. Our writers summarize them to give you the key takeaways