# （Decentralized Finance）DeFi

With the market's call for decentralization and the increasing demand for transaction efficiency and security and privacy, the DeFi market has ushered in a golden age of development. Decentralized finance (DeFi) is an emerging financial technology based on secure distributed ledgers similar to those used by cryptocurrencies. The system removes the control of banks and institutions over money, financial products and financial services.

Various distributed innovative applications of DeFi provide solutions to replace traditional finance, such as oracle systems for off-chain and on-chain data interaction, decentralized lending, token assets, trusts, insurance pledges, and digital asset savings products. A series of rules are set through the memory block chain smart contract technology to ensure absolute execution. One of the reasons for the significant growth of the DeFi market since 2020 is due to technological breakthroughs. For example, the FileCoin incentive layer of IPFS distributed storage is about to be officially launched, and the completion of Cosmos-based relay / homogeneous / heterogeneous cross-chain technology has been achieved. Breakthrough 95%. The DeFi project based on Uniswap alone has exceeded the scale of US$1 billion in February, and far exceeded the scale of US$10 billion in August. The DeFi market is in full swing.

Decentralized finance allows people, merchants, and businesses to conduct financial transactions through emerging technologies that eliminate intermediaries. This is achieved through a peer-to-peer financial network using advances in security protocols, connectivity, software and hardware. anywhere with an internet connection

You can all borrow and trade using software that records and verifies financial actions in a distributed financial database. A distributed database is accessible across multiple locations; it collects and aggregates data from all users and verifies it using a consensus mechanism. Decentralized finance uses this technology to eliminate centralized financial models and make financial services available to anyone, anywhere, no matter where they are. DeFi apps give users more control over their money through personal wallets and transaction services that cater to individuals.&#x20;

How does DeFi work?

Decentralized finance uses the blockchain technology that cryptocurrencies use. Blockchain is a distributed and secure database or ledger. Applications called dApps are used to process transactions and run the blockchain.

In a blockchain, transactions are recorded in blocks, which are then verified by other users. If these validators agree to the transaction, the block is closed and encrypted; another block is created that contains information about the previous block in it. These blocks are "linked" together by the information in each ongoing block, giving it the name blockchain. Information in previous blocks cannot be changed without affecting subsequent blocks, and therefore the blockchain cannot be changed. This concept provides the security of the blockchain along with other security protocols.
