Why has DeFi Become So Popular?
Why has DeFi become so popular? From a user’s point of view, the idea behind an open financial ecosystem is pretty simple. People bring the liquidity that the smart contract architecture uses in a specific way. For instance, it lends out at interest or runs liquidity pools to charge fees; both the DeFi team and the liquidity provider benefit from the situation.
At the same time, people seem to have many claims toward centralized services because of never-ending hacks, exit scams, the mounting pressure of regulators. So, the liquidity has started to flow toward the decentralized segment. In any case, this process has only started.
The main benefits relating to decentralized finance are as follows:
- DeFi applications are potentially useful for residents in countries with weak and declining economies.
- The demand for such services is also greater in developed countries, especially in credit facilities, investment environments, and new revenue generation models.
- In the crypto community, anonymity is highly valued. You and you alone can decide how to manage them. In this sense, centralized platforms are losing the war since they store all user funds in cold and hot wallets.
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