More and more people are deciding to enter the world of decentralized finance. However, for those not familiar with the subject, it can be difficult to understand due to the differences from the traditional system. What is Decentralized Finance? Decentralized finance (DeFi) is an ecosystem that allows users to use different financial products and services. With this financial system, you can carry out a currency exchange operation, take out a loan, carry out placement, and take out insurance. Therefore, it is different from the traditional financial system. There is no central counterparty, and it works on blockchain technology. El País explained this to Martín Larzabal, director of Cryptotrust Fiduciary. DeFi applications create Financial services and products (known as DApps) with a foundation on the blockchain. The most widely used is Ethereum, although there are others such as Solana and Cardano, he added. Decentralized finance uses smart contracts, which “are written in code. They allow two counterparties to set the conditions of a transaction. They do this without the need to trust a third party to execute it,” he said. Also, there are no “names,” and you do not need someone to authorize you to open an account. But, yes, interacting requires a virtual wallet and usually requires placing the money in the smart contract. How can you know the size of decentralized finance? Larzabal said that the amount of money housed in sm...
