Simple Explanation about What is the DeFi System?Why is it important? and What are it's Applications?

October 7th, 2020 #Steemcryptochallenge Week #2 Diving into DeFi by @steemitblog

What is DeFi?
Decentralized finance also known as DeFi is a term which generally refers to the digital assets and financial smart contracts, protocols, and decentralized applications (DApps) built on Ethereum. In simpler terms, it’s financial software built on the blockchain that can be pieced together.
This refers to financial services using smart contracts, which are automated enforceable agreements that don't need intermediaries like a bank or lawyer and use online blockchain technology instead
Decentralized Finance (DeFi) is the movement that leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries.

What are Defi coins?
Defi tokens are transparent blockchain-based financial networks on which lending, borrowing, and other transactions can take place without the intervention of a third party like a bank
With the current Market Cap of $11,857,275,850 here are Top 10 Decentralized Finance (DeFi) Coins.
1.Chainlink (LINK)
2.Band Protocol (BAND)
3.Dai (DAI)
4.Aave (LEND)
5.Uniswap (UNI)
6.Maker (MKR)
7.Synthetix Network Token (SNX)
8.Yearn.finance (YFI)
9.Compound (COMP)
10.UMA (UMA)

Why do we need DeFi?
The objective of DeFi is to give you full control of your assets, and it can because of decentralization and blockchain technology. ... Anyone can store, trade, and invest their assets in blockchain securely and earn a much higher return than from the traditional financial system.
DeFi brings in decentralized exchanges to make sure that there no centralized point-of-failures within the ecosystem. Centralized organizations manage the majority of the cryptocurrencies.

Why Is it Important?
It gives everyone in the world access to an essentially unlimited number of financial products and services. These opportunities, which range from simple savings products to complex trading platforms, are nearly frictionless, in the sense that they require very little infrastructure.

What Are Defi Applications?
The most popular and fasting growing sector of DeFi is borrowing and lending platforms. Similar to a bank, users deposit money and earn interest from other users borrowing their assets. However, in this case the assets are digital and smart contracts connect the lenders to borrowers, enforce the terms of the loans, and distribute the interest. And it all happens without the need to trust one another or middleman bank. And, by cutting out the middleman, lenders can earn higher returns and more clearly understand the risks thanks to the transparency blockchain provides.
Tokens called stablecoins are also important to the DeFi ecosystem. You may be under the impression that all cryptocurrency is volatile. However, stablecoins are tokens designed to hold a specific value and are typically pegged to fiat currency like the US dollar. For example, DAI is a stablecoin pegged to USD and backed by ether (ETH). For every DAI, there is $1.50 of ETH locked into the MakerDAO smart contract as collateral.

What's the Future of Defi?
DeFi isn’t stopping anytime soon!
If you believe the future has digital money, then you should be exploring what DeFi has to offer. At the time of writing this, the entire decentralized finance market is worth $494.6M. Ethereum has become the blockchain of choice for many companies to build their financial products. And more and more DeFi applications are built every day.