DeFi: Decentralized Finance

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Decentralized finance (DeFi) refers to the infrastructure, processes, and technology used to democratize economic transactions.

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It works on dApps (decentralized applications) to manage transactions and run blockchains.

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Transactions are stored on a secure, immutable blockchain. Instead of fiat currency, transactions are made in cryptocurrencies.

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It is believed to be the future of finance where transactions are executed in real-time without third parties using blockchain technology powered by smart contracts.

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Common types of DeFi applications include decentralized exchanges, stablecoins, lending platforms, wrapped bitcoins, and prediction markets.

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DeFi adoption picked up momentum in mid-2020, reaching nearly $100 billion in TVL by the end of 2021.

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The DeFi market has since declined due to hacks, liquidity crunches and regulatory stress.

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