Decentralized Finance (DeFi): The Future of Finance
                     Decentralized 
Finance (DeFi): 
The Future of 
Finance
What Is 
Decentralized 
Finance 
(DeFi)?
Decentralized finance (DeFi) is an 
emerging financial technology based on 
secure distributed ledgers similar to those 
used by cryptocurrencies. The system 
removes the control banks and 
institutions have on money, financial 
products, and financial services.
Source: www.investopedia.com
Key 
attractions
• It eliminates the fees that banks and 
other financial companies charge for 
using their services.
• You hold your money in a secure 
digital wallet instead of keeping it in a 
bank.
Source: www.investopedia.com
Centralized 
Finance
• In centralized finance, your money is 
held by banks, corporations whose 
overarching goal is to make money. 
• The financial system is full of third 
parties who facilitate money 
movement between parties, with each 
one charging fees for using their 
services.
Source: www.investopedia.com
Decentralized 
Finance
• Decentralized finance eliminates 
intermediaries by allowing people, 
merchants, and businesses to conduct 
financial transactions through 
emerging technology.
Source: www.investopedia.com
How Does 
DeFi Work?
• Decentralized finance uses the 
blockchain technology that 
cryptocurrencies use. A blockchain is a 
distributed and secured database or 
ledger. 
• Applications called dApps are used to 
handle transactions and run the 
blockchain.
Source: www.investopedia.com
How Does 
DeFi Work 
cont.
• In the blockchain, transactions are 
recorded in blocks and then verified by 
other users. If these verifiers agree on 
a transaction, the block is closed and 
encrypted; another block is created 
that has information about the 
previous block within it.
Source: www.investopedia.com
DeFi Financial 
Products
• Peer-to-peer (P2P) financial 
transactions are one of the core 
premises behind DeFi. A P2P DeFi 
transaction is where two parties agree 
to exchange cryptocurrency for goods 
or services without a third party 
involved.
Source: www.investopedia.com
DeFi Currency
• DeFi is designed to use cryptocurrency 
for transactions. The technology is still 
developing, so it is difficult to 
determine precisely how existing 
cryptocurrencies will be implemented, 
if at all. 
Source: www.investopedia.com
What Is Total 
Value Locked 
in DeFi?
• Total value locked (TVL) is the sum of 
all cryptocurrencies staked, loaned, 
deposited in a pool, or used for other 
financial actions across all of DeFi. 
• It can also represent the sum of 
specific cryptocurrencies used for 
financial activities, such as ether or 
bitcoin.
Source: www.investopedia.com
The Future of 
DeFi
• Decentralized finance is still in the 
beginning stages of its evolution. For 
starters, it is unregulated, which 
means the ecosystem is still riddled 
with infrastructural mishaps, hacks, 
and scams.
Source: www.investopedia.com