Decentralised Finance, or more commonly known as DeFi, is an umbrella term for peer-to-peer financial services hosted on the blockchain that are geared towards disrupting the conventional financial system.
DeFi allows users to earn interest, borrow, lend, buy insurance, trade derivatives and trade assets without relying on any third party like banks or brokerages to facilitate the transaction. It also does away with the lengthy KYC process required to transact with any of these organisations.
More importantly, users have full control over their assets, differing dramatically from the centralised financial organisations we all currently utilise.
One of the main benefits of DeFi is the easy access to financial products, particularly for those individuals who do not have access to the current financial system. According to the world Bank Data from 2017, approximately 1.7 billion adults globally are estimated to be “unbanked”.
In summary the aim of DeFi is to create a financial ecosystem that is open source, permissionless, transparent and operates without any central authority. Once fully adopted, DeFi has the potential to totally disrupt the current financial system as we know it.