Common problems of decentralized finance and solutions

True decentralized finance has the potential to disrupt traditional banking like I had earlier discussed but they are not without their challenges, infact they are some issues that defi actually faces in it's bid to disrupt traditional banking and for it to be able to do this effectively it has to overcome this challenges I believe that's the only way it can truly be in the right direction to truly displacing tradtional banks.

Hence today I will talk on what these challenges are that decentralized banking faces and their possible solution.

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Challenges in defi's bid to disrupt traditional banking

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One of the issues I believe that hinders defi is lack of awareness or proper education as to what decentralized finance brings, I believe not all are really all enlighten about the full pecks of defi and as such how can people possibly use the service of something they know nothing about. Most of the masses or a better percent of the world's population lacks proper education as to what decentralized finance truly entails, now this becomes a problem in that one is isn't aware of something wouldn't venture into that they know little or nothing about this thus hinders defi in it's quest to gain mass adoption.

There is also an issue of lack of liquidity or insufficient liquidity, this is an issue that needs attention as sometimes a defi pool may lack suffient liquidity needed for the efficient buying and selling transactions from its users, invariably users who on one or several occasions have not been unable to execute positions due to insufficient liquidity may not want to stick around for longer as it kills traders spirit, when people are not able to do the one thing they are desiring to, when they can't get access to a financial services defi is supposed to offer because of no liquidity then they are more likely not going to stick around much longer, this could drive them out from the space.

This is a system which relies on cryptocurrencies, and ofcourse cryptocurrencies in general are a highly speculative and highly volatile asset class. Now most of the transactions in defi are done with cryptocurrencies which are known for its instability now this becomes a problem, as there are a lot of people out there who have low risk appetite and wouldn't want to be involved in something as volatile as cryptocurrency, some actually wants something that has a certain level of stability which is obviously lacking in this space, I mean some are not willing really for the risk exposure this affords and would rather sit it out so invariably the volatile nature of cryptocurrencies impede the quest of decentralized finance to gain mass adoption and potentially displace traditional banking.

Decentralized finance also has another problem which is due it's complex features, not everyone really has the technical know-how to navigate their way around the complexity of defi, most of it's interface are so that one who lacks the problems technical know how may not know how to get around it, so in other words due to most of defi interface not being user-friendly it serves as a deterance to those who wish to enter this system and kind of hinders or even serving as a barrier for those who wish to gain entry but can't deal with the complex interface.

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Viable solutions

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Now an alternative solution to solving this challenges that are experienced in defi for it's complex interface I believe the best option to tackle this is to user that users interface are improved on and better developed to be easy and stress free for all to access and navigate their way especially for people with little or no technical know-how, let them be able to go about their way this will go a long way in ensuring that a wider audience could access defi financial services making it more easier for a wider acceptance.

For the issue of volatility of cryptocurrencies which are used for making transactions in the defi space I believe it will be wise for asset in the defi world to be diversified, there shouldn't really be just one cryptocurrencies asset but a wide range of assets should be made available in defi this I believe it's a good way to better combat the effect of volatility as it will ensure users diversify their asset usage and investment too so that all could be able to easily choose the best asset of their choose and if there are stable coins like Usdt and usdc for instance it will even help to provide users with the most needed stability they crave.

Also I believe that people should be able to execute trades at will hence to ensure that is done effectively and efficiently enough liquidity should be made available as this will help in ensuring the full functionality of all the financial services defi offers and thus help in making users happy as they wouldn't experience any hitches or limits in the usage of any financial services and this would thus help in creating a happy community which will in effect help in bring more people into the defi ecosystem.

Proper awareness campaign should be initiated too, it's vital all come to know the value and importance of defi, proper education should be available so a wider range of people could be educated as to what decentralized finance is and all the full potential that comes with it and this no doubt will help to have more people to trust in this system which is good as it serves as a pave way for people to come in to the world of decentralized finance and enjoy it's full financial services to the fullest which indeed has the potential to complete in all sense the traditional banking system of our world today and have it's place as the global system for all financial services. This is only possible first through informed education of the masses.

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Conclusion

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If defi could in this way combat all this challenges it faces then coupled with the existing benefits it offers then I believe really that it has all it takes to replace the traditional financial systems like the banks and all since it can do all the banks can and even more with accurate precision.