Decentralized finance is also known as DeFi for short, DeFi may completely change the way we see traditional financial services. DeFi is a movement that aims at making a new financial system that is open to everyone. Through DeFi many of the traditional centralized financial services that we have grown accustomed to, are available in a completely trustless, transparent, and efficient manner that does not require a central intermediary.
In the past, we have always used centralized finance. While traditional financial transactions are controlled by middlemen, decentralized finance frees the system from these institutions’ constraints. With drastically lower costs decentralized finance has great investment potential and its total value has grown. Decentralized Finance represents the alternative to traditional financial services.
There are no banks instead there are pieces of code that run and act as a bank. They are open to anyone. They do not require you to trust them because they are a piece of code. If you wanted to, you could read through them and verify that it is not going to scam you. There is also censorship resistance and cheaper than traditional centralized finance.
Decentralized finance represents an aspect of the crypto sphere which centralizes peer-to-peer (P2P) transactions and digital finance. It taps into the advantages of smart contracts and the efficiency and power of digital contracts that live on the blockchain, to provide platforms for lending, borrowing, trading, saving, and earning interest that do not require all of the usual bureaucracy and paperwork.
Our economy is becoming increasingly digital, but it may still be difficult to visualize this transformation action that DeFi represents. To understand how it works, let’s think of the lending process.
For one to be able to take out a loan through a bank, they have to fill out some documents, there are some credit scores to be checked, representatives to speak to, and time to be spent discussing your options and waiting for approvals. In the world of DeFi, you have the option to store your collateral in the system to obtain a loan within minutes and, once your loan is paid off, your collateral is returned to you.
In the same way, DeFi is designed to improve upon the process of holding savings on a decentralized platform because your assets can earn significant interest with higher rates. This kind of passive income is incompatible with the current banking system, which provides minimal interest to investors and doesn’t allow for the same level of financial growth over time.
It offers a financial revolution that helps eliminate economic gaps and creates attainable financial solutions through the use of crypto. DeFi is offering a more financially soluble future, empowering to build wealth independent of institutions and powered by blockchain and mathematics.
Why Decentralized Finance?
The primary goal of DeFi is to give everyone access to traditional financial services by providing a borderless, permissionless, and uncensored financial service ecosystem based on blockchain and smart contract technologies. With DeFi, people have full access to financial services and complete control of their assets and the decisions over them. This is the role decentralization plays.
Use cases for DeFi are users deposit their crypto into a smart contract, and when someone else borrows the money, they earn interest. Smart contracts connect borrowers and lenders and also distribute the interest. They give their account holders a certain level of control and access over what they do. Token holders are able to determine what they do with their tokens like vote on a variety of risk parameters, such as what collateral can be used, how much debt can be issued, and the fees charged.
DeFi democratizes access to financial services. DeFi offers decentralized financial services, censorship resistance, and worldwide participation regardless of social or financial status.
How can access to DeFi be enabled?
Most of DeFi services are web-based interfaces that interact with Ethereum blockchain on the backend through smart contracts.
Decentralized finance is built on three main things: cryptography, blockchain technology, and smart contracts. These are the same things upon which the ClassZZ main net is hinged.
What ClassZZ main net is doing with their blockchain is to have a blockchain that is fitted for the regulation and meeting the regulator’s demand. Our innovative cross-chain technology has enabled us to take a unique position in our approach to the market. Since Te Waka protocol is trustless, decentralized, and universal, our community operates on a basis of project neutrality.
The sole purpose of ClassZZ main net is to empower other DeFi projects to attain a further reach, through the integration of Te Waka protocol. In the back of the mind of the developers, they want to be complementary, and not be a competition to the vast majority of projects in the DeFi space.
Access to decentralized finance is enhanced through the use of stable coins, smart contracts, decentralized exchanges, and insurance. Evolution is the answer to everything that exists, and finance is no exception.
Through ClassZZ main net and the protocol it uses - Te Waka protocol, native tokens are exchanged. Mapped tokens are unable to participate in the DeFi activities, making them less attractive to users. Thus, native tokens are needed to participate and trade. Exchanges using native tokens are straightforward rather than indirect through centralized exchange services.
From anywhere you have an internet connection, you can lend, trade, and borrow using ClassZZ main net that records and verifies financial actions in distributed financial databases. A distributed database is accessible across various locations; it collects and aggregates data from all users and uses a consensus mechanism to verify it.
In conclusion, imagine an ecosystem or a system where you have control over your finances with transparent, trustless, permissionless, interoperable, and decentralized features. This is what ClassZZ main net developers seek to give account holders. This is still at its progressing stages. Something magical is happening in the open financial system. Crypto is bringing money online, and there is a quantum leap in what is possible when it comes to the functionality of money. This is a rare opportunity to see an entirely new industry blossom from scratch. The DeFi space will at first play catch up with today’s financial services industry. But with time, it is hard to even fathom what innovations will come about when the power to build financial services is democratized to anyone who can write code.