Decentralised finance (DeFi) is a term from the categories of blockchain, crowdfunding and finance as well as digital transformation. It describes a completely new approach to finance in which digital technologies replace traditional banks. Instead of a centralised bank, transactions are distributed across many computers worldwide. This makes it possible to process financial services such as loans, savings, trading or investments directly between users without intermediaries.
The big advantage: DeFi is open to everyone, around the clock, regardless of their place of residence or account balance. This increases transparency, often reduces costs and makes the market fairer. The basis for this are smart contracts. These are digital contracts that are automatically executed when certain conditions are met.
An illustrative example: Normally, you take out a loan from a bank, which determines the conditions. With DeFi, someone can take out a loan worldwide via a special platform, without a bank - just by providing collateral in the form of cryptocurrencies. An algorithm regulates the granting of the loan and the interest rate. This creates a new financial market that is digital, open and decentralised.
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