Understanding DeFi and Its Importance in the Crypto Economy

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“The aim of DeFi is to create an entirely new financial system, completely independent of the traditional financial economy.” jacksonwoodHQ explains why DeFi is so important to understand in this week’s Crypto for Advisors newsletter:

Lending and borrowing in the DeFi ecosystem

An interesting thing to note is the yields generated by lenders in the DeFi ecosystem are substantially higher than the traditional financial system. Running a smart contract is much more cost-effective than running a traditional bank; therefore, nearly all of the yield generated from lending money is passed directly back to the lender via the smart contract. Many people place their trust in these transparent smart contracts and are able to generate a significant income from their utilization.

 

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