#DeFiGetsGraded

Decentralized finance (DeFi) is an emerging peer-to-peer financial system that uses blockchain and cryptocurrencies to allow people, businesses, or other entities to transact directly with each other. The key principle behind DeFi is to remove third parties like banks from the financial system, thereby reducing costs and transaction times.

In the U.S., the Federal Reserve and Securities and Exchange Commission (SEC) define the rules for centralized financial institutions like banks and brokerages, which consumers rely on to access capital and financial services directly. DeFi challenges this centralized financial system by empowering individuals with peer-to-peer transactions.

KEY TAKEAWAYS

Decentralized finance, or DeFi, is an emerging peer-to-peer system attempting to remove third parties and centralized institutions from financial transactions.

DeFi consists of cryptocurrencies, blockchain technology, and software that allows people to transact financially with each other.

DeFi is still in its infancy and subject to hacks and thefts because of sloppy programming and a lack of security testing before applications are launched