The world of finance is becoming more and more decentralized as technology advances. People have begun to take advantage of this new technology and have started using decentralized platforms such as decentralized exchanges and decentralized lending. With the emergence of these platforms, the traditional financial system has been disrupted.

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Decentralized finance is a new wave of innovation and disruption that is set to change the financial landscape. This wave of change is being driven by blockchain technology, and the potential for disruption is immense. Blockchain technology has the power to revolutionize how we use and manage our money, including how we pay for goods and services.

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Why is it important?

The DeFi world is a new way of living that has been growing in popularity over the past few years. The DeFi world is the convergence of digital and financial services. This world is made up of smart contracts, cryptocurrencies, and blockchain technology. It is important because it helps people to have a more secure and transparent financial life.

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DeFi Vs CeFi

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Decentralized Finance

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DeFi (pronounced dee-fye) is the short form of decentralized finance. Decentralised finance is a financial model that uses cryptocurrencies and blockchain technology to create a new way of doing business.
It is peer-to-peer and doesn't rely on central banks or traditional banking systems.Decentralised finance, also known as peer-to-peer lending, is an alternative financial system where money is loaned directly from one person to another.

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There are many different types of decentralized financial platforms that allow for different types of transactions. One such platform is Ethereum, which allows for smart contracts and decentralized applications to be created.

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Advantages of DeFi

• By decentralising finance, people can have more control over their finances and they will be less likely to be exploited by hackers.

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• It's cheaper and faster to transfer money from one country to another through decentralised finance.

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• The benefit of this system is that it is more efficient and accessible than the traditional banking system.

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• There are also many advantages to using decentralised finance, including the fact that it is more cost-effective, faster, and more accessible.

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Disadvantages of DeFi

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• Many people are concerned about the security of their money when it is held by a service provider and the customer cannot control their money.

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• Decentralized finance is that it is not regulated by any central authority and this can lead to unfair transactions.

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• Many people are not equipped with the knowledge to manage their own finances on decentralized finance so it's leading to a higher chance of financial fraud.

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Centralized Finance

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Centralized finance is a system which means that the money is managed by one individual or entity, such as a bankCentralized finance is a system of collecting and managing financial resources. The purpose of centralized finance is to coordinate the collection and management of financial resources and to reduce the costs associated with these activities.

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Advantages of CeFi

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• Centralized finance is a system that has been around for centuries, and has been associated with many positive benefits such as stability and trust.

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• One advantage of this system is that it is easier to keep track of what is going on with your money.

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• Another advantage of centralized finance is that it is easier to access your money and move it around.

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• In CeFi you can use a bank account or credit card to make purchases or transfer money to other people but there is such an option in DeFi.

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• Centralized finance also helps keep inflation under control.

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Disadvantages of CeFi

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• There are also some risks when you decide to use a centralized service provider because they could shut down the service or go out of business.

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• One of the biggest drawbacks is that the service provider can charge you additional fees.

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• In centralized finance, everything is controlled by the government and there is no individual freedom, which is why it has been criticized.

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Decentralized Exchange

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Secreenshot from the website of Uniswap but as of now I have no experience using it. Uniswap is the best example of Dex having hundreds of tools and Dapps. Secreenshot Source

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Decentralized Exchange, also known as DEX, is a trading platform that uses blockchain technology. Decentralized Exchange is a form of trading which is done without the use of a third party, like a broker.This means that it's not owned by one central entity and is a peer-to-peer network, meaning that the exchange is run by the community.

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This can be an advantage because there is no single point of failure and you are able to exchange currencies without having to go through a centralized party. The decentralized nature of DEX also means that it's much more difficult to hack because all transactions are recorded on the blockchain and cannot be tampered with. This is perfect for those who want to trade in large amounts of cryptocurrencies because it is cheaper than using a centralized exchange.

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Future of the DeFi

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The future of DeFi is uncertain. As more and more people are becoming aware of the blockchain and cryptocurrencies, it's possible that the future of digital assets will change forever. The way people use and interact with cryptocurrencies is ever-changing, and with digital asset exchanges becoming more widely used, we may see a shift in the way people invest in cryptocurrencies.

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As the cryptocurrency industry becomes more mainstream, there will likely be many changes to come for DeFi and the blockchain.Decentralization is already one of the most widely used methods of finance and many startups are already using this technology. Decentralization has become an inevitable reality and it's only a matter of time before we see it in the mainstream.

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It's definitely a growing industry. There are many different types of decentralized financial services, including crypto-currencies and lending platforms. The blockchain technology is also a powerful tool that's revolutionizing how we do business and finance.

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Closure

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DeFi will continue to grow in the future because of the new innovations and new ways of doing business. It's hard to predict what kind of changes we'll see in the near future, but it's definitely exciting to be able to be a part of it.I hope you have enjoyed my post, I'll be there in the next post till then take care goodbye.

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I would like to invite @ijelady, @okere-blessing and @morgan76 in the contest.

Have a Nice Day