International Research Journal of Engineering and Technology (IRJET)
e-ISSN: 2395-0056
Volume: 10 Issue: 04 | Apr 2023
p-ISSN: 2395-0072
www.irjet.net
Decentralized Finance Shreyansh Kumar Purwar1, Dr. Supriya Lamba Sahdev2 11st Year PGDM Student at ISBR Bangalore, Karnataka, India
2HOD, Dept. of Marketing Management at ISBR Bangalore, Karnataka, India
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Abstract - Decentralized finance, commonly referred to as
designed to provide a safe and transparent means of conducting transactions without the need for middlemen.
DeFi, is a new paradigm in the financial system aimed at providing access to financial services and products through decentralized networks. We use blockchain technology to create a transparent and trustworthy system that works without intermediaries. DeFi is growing in popularity as more people realize the benefits of technology. DeFi may improve the financial industry which is more transparent, secure, and accessible alternative to traditional finance for all. This is a new and emerging field that is rapidly changing the way the financial system works. One of the most important contributions of blockchain technology to DeFi is the creation of decentralized networks. Instead, it is spread over many computers or nodes. This means there is no single point of failure, and the system is not vulnerable to cyberattacks or hacks.
2. DeFi and its features 2.1 Decentralization DeFi systems are decentralized. That is, it works on peer-topeer networks that are not controlled by a central authority. This eliminates the need for intermediaries such as banks, brokers, and other financial institutions, reducing costs and increasing accessibility.
2.2 Transparency
Key Words: DeFi, Blockchain, Innovation, Finance, Decentralisation, Cryptography, DLT
DeFi platforms are transparent. This means that all transactions on the blockchain are visible, and users can track asset movements in real time. This creates trust for users and removes the need for intermediaries to validate transactions.
1. INTRODUCTION
2.3 Smart contract
6 Blockchain technology also provides a transparent system
DeFi platforms use smart contracts, which are self-executing contracts that run on the blockchain network. Smart contracts enable automated and secure execution of financial contracts, eliminating the need for intermediaries such as banks and lawyers. Smart contracts can be programmed to perform specific actions when specific conditions are met. B. Loan Payments with Posted Collateral.
for recording transactions. This technology creates an immutable digital ledger that records all transactions. There can be no alteration to the transaction once done. This ensures system integrity and prevents fraud. DeFi uses blockchain technology to create decentralized applications (DApps). They run on decentralized networks and have scopes like lending, borrowing, trading, and investing. These DApps eliminate the need for intermediaries such as banks, brokers, and other financial institutions. DeFi platforms use smart contracts to automate transactions, automatically executing when certain conditions are met. A smart contract operates on a blockchain network. For instance, a smart contract can execute a trade when a certain asset reaches a certain price level.
2.4 Cryptography Blockchain technology uses cryptography to secure transactions and data on the network. Transactions are encrypted using complex mathematical algorithms, making them extremely difficult to hack or tamper with.
2.5 Safety DeFi platforms use blockchain technology which gives improved security. Transactions are encrypted and the blockchain is immutable. It means issued or managed by DeFi services can't in proposition be unilaterally expropriated or modified by third parties, indeed by those furnishing intermediation and other services. Users retain full control. Thus, centralized cryptocurrency exchanges that have custodianship over digital means are not DeFi businesses, but multitudinous are still developing DeFi offerings. 2
DeFi platforms also offer a high level of transparency and traceability. All transactions on the blockchain are visible to everyone and users can track asset movements in real time. This creates trust for users and removes the need for intermediaries to validate transactions. The use of cryptocurrencies is another major contribution of blockchain technology to DeFi. Cryptocurrencies are digital assets that operate on decentralized networks. They are
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