The impact of DeFi on traditional financial intermediaries

Decentralised finance (DeFi) is a new way to manage money using blockchain technology and smart contracts, and removes many of the traditional intermediaries usually required to carry out financial operations. DeFi offers a decentralised place to borrow, buy, sell and make money on assets, with smart contracts being agreements between parties carrying out their terms and conditions on an automated basis. The first DeFi project, MakerDAO, was launched in 2017 and since then the DeFi community has increased and new projects have been created. As reported by the California Business Journal: “The total value locked in DeFi protocols has grown from less than $1 billion in 2020 to over $100 billion in 2022. The DeFi market is expected to continue growing, with analysts predicting that it could reach $1 trillion by 2025”.

The way TradFi operates v DeFi

Source: medium.com

Application and use case of DeFi

DeFi can be used for a range of financial activities including lending and borrowing, such as…