Decentralized finance (DeFi) is a new digital financial infrastructure that eliminates the need for a centralized entity to approve transactions. Earnity’s CEO, Dan Schatt, believes DeFi is a catch-all term for a new wave of financial services innovation. In addition, DeFi links with blockchain, the decentralized, immutable, public ledger on Bitcoin that allows network computers to keep a copy of the transaction history. As a result, no single entity has control over the transaction ledger.
How Does It Work
DeFi uses smart contracts and cryptocurrencies to provide services, eliminating the need for intermediaries such as guarantors. Furthermore, it is open-source, which means that protocols and apps can theoretically be inspected and improved by users. Because of this, users can mix and match some protocols to open unique opportunities by developing their dApps.
How Do People Capitalize DeFi
People are attempting to profit from the growth of DeFi in a variety of ways. First, you can generate passive income by using Ethereum-based lending apps. For another alternative, yield farming is a riskier practice used by more experienced traders. Finally, users scan through a plethora of DeFi tokens in the hopes of finding opportunities for higher returns, but it is complex and lacks transparency.
Is It Risky
DeFi is extremely risky, primarily since it depends on a new technology that disrupts an established institution like a centralized bank. It is even more difficult for newcomers drawn in by the promise of yield farming and passive income profits. Earnity, the new platform led by crypto finance veteran Dan Schatt, is built with the primary goal of helping new users succeed in their buying endeavors.