When the cryptocurrency industry was founded, it revolved around Bitcoin (BTC) and its primary blockchain. The concept ideology that later materialized and laid the foundation of crypto-blockchain technology was decentralization.
The person going with the pseudonym “Satoshi Nakamoto”, was the one who came up with this ideology. He wanted the world to be free from the network of central bodies who at present, control the majority of the world’s population’s personal and private information.
The foundation of decentralization was to snatch the control of such information from central bodies, governments, corporations, and financial institutions, and give them back to people.
However, over time, it turned out that Bitcoin wasn’t as much decentralized as it was expected to be. This is the reason why more blockchain networks were launched that stressed decentralization.
In the case of decentralization, the people were able to take full control of their personal and financial information. Through the platforms, the people were able to keep their information intact and weren’t required to give it out to any central body.
This eventually laid the foundation of decentralized finance (DeFi) which is currently hosting thousands of cryptocurrencies. Even Ethereum (ETH) has been launched as part of the DeFi space.
It was in 2017 when the decentralized finance (DeFi) sector was founded and since then, all major cryptocurrencies have been launched through the system.
Although it was launched back in 2017, it didn’t get much attention and spotlight until the end of 2020. That was the turning point for the entire cryptocurrency and it became a lucky charm for the decentralized finance sector.
Right from the beginning of 2021, the decentralized finance sector has been growing tremendously. As of now, the overvaluation of the decentralized finance sector is $161,010,564,632. Then there is the daily trading volume for the DeFi space, which at present is around $15.37 billion on average.
Over time, the capitalization, as well as the trading volume for the DeFi sector, is expected to rise tremendously. This is the reason why the majority of cryptocurrencies are being launched within the DeFi space.
As of now, several blockchain networks such as Polkadot, BSC, Solana, and Avalanche have been launched that support the DeFi space. In addition to that, even the nonfungible tokens are being introduced within the decentralized finance space.
When it comes to the major components within the DeFi sector, some of the major components include stablecoins, lending services, and decentralized exchanges (DEX).
In the decentralized finance sector, several stablecoins have been launched that are pegged with the USD. The movement in the prices for stablecoins can be observed as the price of the USD moves up and down. Some of the major DeFi stablecoins include Frax (FRAX), Liquity USD (LUSD), Origin Dollar (OUSD), and more.
Then there are the lending and borrowing services that have been launched within the decentralized finance space. When someone wants to acquire a loan or borrow money from a money lending platform, there are several checks they have to go through before the approval.
There are several cases where the financial situation of the applicants is taken into consideration before approving loans. A person has to go through several checks, screenings, and several processes in order to find out if he/she is eligible for a loan or not.
In the case of decentralized finance, the investors are neither required to share personal nor financial information. If they want the loan, they get it and have to return it in the form of cryptocurrencies without any extra conditions or requirements. There are no extra fees or hidden charges that the people have to pay.
Just like a Bitcoin exchange, a centralized exchange, decentralized exchanges (DEX) have been founded. While most of the BTC and all the centralized exchanges want you to go through AML and KYC checks, the decentralized exchanges live up to their name being decentralized.