Difference Between DeFi and Dapps
📊Decentralized Finance or DeFi is a term for a growing ecosystem of financial protocols and applications. These protocols and applications aim to provide a more open, accessible, and equitable financial system that does not rely on centralized intermediaries like banks or governments. Dapps, or decentralized applications, are applications that run on a decentralized network like Ethereum.
👨💼While DeFi protocols and applications can be considered Dapps, not all Dapps are part of the DeFi ecosystem. DeFi protocols and applications tend to focus on financial use cases like lending, borrowing, and payments, while Dapps can be built for various purposes.
📲DeFi and Dapps are decentralized and have comparable features. However, the primary difference is that DeFi, or Decentralized Finance, is a movement seeking to create financial applications based on the blockchain. Dapps, on the other hand, are decentralized applications built on top of a blockchain. While DeFi applications focus on finance, Dapps can be used for various purposes. Dapps are not restricted to financial use cases; they can also be used to develop gaming applications, gambling, education, web browsers with enhanced privacy, etc.
📈Another significant difference between the two is that Dapps leverages smart contracts, which, once launched, require a consensus to alter. DApps can run on a P2P network of computers, unlike DeFi, which is completely limited to blockchain networks.
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