Category: 9. What are the risks of DEFI?

DEFI only emerged a few years ago yet has already grown to manage over $200bn in crypto funds. There is clearly a huge demand for services that enable crypto investors to generate active returns from their funds rather than just hodling.  However, DEFI’s immaturity, decentralised nature and allure of financial opportunity have generated significant risks…

The huge attraction of DEFI is that it empowers cryptocurrency holders to consume financial services typically only available to accredited investors while allowing them to retain control over their funds. The flipside of this autonomy is that users assume the risks usually borne by traditional intermediaries such as banks. We can group the different types…

DEFI is only possible because of the Turing Complete nature of the Ethereum blockchain. Being Turing Complete simply means that Ethereum is capable of executing any instruction that can be reduced to mathematics. Those mathematical instructions are programmed using a purpose-written language called Solidity to craft Smart Contracts, which automate financial services. That Smart Contract…

DEFI stands for decentralised finance and is a catch-all for a range of blockchain-based financial services automated by Smart Contracts and delivered through digital applications (dApps) that users can connect directly to without any formal vetting process. According to DefiLama, over $200bn of cryptocurrency is currently locked in DEFI applications with over half of that…

What you’ll learn : What does DEFI stand for in crypto? What is DEFI and how does it work? What are the types of DEFI risks? Are the risks worth it? DEFI gives anyone with an internet connection and a supported cryptocurrency wallet access to financial services previously off-limits or restricted by KYC. Centralised intermediaries…