Why is the challenge exploding again in 2022?

2022 will see another update on the Defi site.

The idea of ​​Defi is to provide financial aid and other financial aid without organization. No bank or organization can be trusted to hold, exchange and protect assets for you. Own and manage your own digital assets. Everything is automated and controlled by code. Because it is blockchain-based, security is enhanced with encryption.And Defi, as the name suggests, is a non-destructive, transparent and open class.

While the banking industry has always relied on intermediary entities, the banking industry creates the conditions for future financial exchanges. The emergence of these apps allows people to interact directly with banks and financial institutions, eliminating the need for middlemen.In the future, people will be able to use this app to transfer money, loans, investments and insurance assets. The rapid growth of the industry will also create jobs for millions of people.

DeFi has the potential to be financially independent in the end.The so-called democratization of finance can be better understood with a few examples. For example, by redefining financial services based on the use of decentralized software (Dapps), a user would be less likely to interfere with centralized organizations. DeFi allows people to borrow cryptocurrency from a liquid pool. Liquidity is provided by investors (you and me) to put their cryptocurrency needs into the pool while managing the assets. When a borrower comes from the pool, the trader uses part of the exchange rate. On top of that, when the price of cryptocurrency rises, investors

After some time, the assets are removed from the cash pool and the interest earned by providing cash is added. Liquidity pools typically offer annual discounts or APYs. It is always possible to get 100% or 100% APY (annual return) from the pool. This is usually because it eliminates the middle class (the banks) because the banks are getting the most out of their costs and interest.

Although the financial market has always been based on a centralized market, the financial system is implemented by the operating rules of the Ethereum blockchain. Unlike fiat currency, blockchains don't change, and anyone with a computer and internet connection can execute smart contracts. At the same time, the development of decentralized trust finance is opening up, which makes the development of enterprise-class solutions more profitable. You can build an entire business on top of these new technologies, such as the blockchain-based e-commerce platform.

The DeFi protocol is based on an unauthorized blockchain.These are open source and censorship resistant. Moreover, the DeFi system is not controlled by a central control system. This will allow more people to participate in decision-making and users will benefit from the improvement. With an open source design, DeFi will enable peer-to-peer libraries and develop new business models (such as DAO).

Unpredictable financial markets will provide new financial services that have never been available before, and businesses will continue to benefit from a competitive environment. For example, exchanging money with the blockchain would be easier than relying on traditional banks. In addition, networks are more secure and systems operate better. This also results in a change of more than a second, affecting the overall cost of the network.

Since DeFi does not require a centralized management system, smart contracts automate the Defi system to facilitate the implementation of specific changes when the parties meet certain rules or regulations and fulfill the agreement as promised.Smart contracts leverage Oracle (oracles like Chainlink) to connect to real data.

However, we still cannot ignore the dangers. DeFi promises high rewards, but also comes with high risks. This is mainly due to the volatility of cryptocurrencies, with the permanent decline being one of the consequences. At this point, it is not yet guaranteed that the rules below support disease-free smart contracts. DeFi platforms also make bad guys worse. DeFi technology is still in its infancy and has many classes and has grown by mistake. As it evolves, it becomes more and more secure.

While some may be reluctant to enter the world of financial management due to the risks and risks that exist in the crypto space, those who have already joined are proud of the return of their capital. It was only a matter of time before many people knew about DeFi's price and performance and ended up getting into it. As more and more people enter DeFI is pushed into critical terms and may change financial support.