DeFi doesn't offer the same protections as traditional banks There's a very good chance it will top $100 billion by the end of this year. A lot of DeFi applications are built on the Ethereum (ETH) network, which means the price of Ethereum impacts TVL as well as the amount of money that's invested in DeFi.Īt the end of 2019, TVL was around $8.5 billion, and by the end of 2020 it had reached about $25 billion. Get startedĭeFi Pulse tracks Total Value Locked (TVL), which represents the value of funds deposited in various DeFi applications, and it's a good indicator of the size of the market. Learn more and get started today with a special new member discount.
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The same blockchain technology that powers Bitcoin is what enables the decentralized finance industry to cut out intermediaries. Previously, digital money required the backing of a third party - whether a bank or government - to validate transactions and guarantee payments. When Bitcoin first launched, one of the amazing things about it was its decentralized nature. For example, I might lend you $100 worth of Bitcoin (BTC) via DeFi, and I'd then earn interest on that loan - without involving a traditional lender. It encompasses loans, interest-earning accounts, money transfers, insurance, and cryptocurrency exchanges. But what exactly is DeFi and what do cryptocurrency investors need to know about the industry? What is DeFi?ĭecentralized finance is an umbrella term for a host of activities that cut the middleman out of traditional financial services like banking. The words "decentralized finance" or "DeFi" get used a lot these days, especially if you're into cryptocurrency.
Decentralized finance can generate high returns, but you need to understand the risks.
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