DeFi: Unchaining the Shackles of Traditional Finance

Can you believe a great financial transformation is already here in our world? For centuries, global finance has been dominated by towering institutions: governments, banks, brokers, and investment firms. But in recent years, a quiet revolution is underway and it's called Decentralized Finance (DeFi). This isn't just an upgrade but a complete reimagining of financial services, built on the transparent rails of blockchain technology that cannot be controlled by any single authority.

At its heart, DeFi promise to replace traditional financial intermediaries with code. Imagine getting a loan, earning interest on your savings, or trading assets without needing a bank, a broker, or even a credit score. Instead of relying on trust in institutions, DeFi relies on trust in mathematics and publicly auditable smart contracts. These self-executing agreements automatically handle transactions when conditions are met, eliminating human error and bias. That's a form of financial freedom that the world did not imagine happening just a few years ago.

How DeFi is Proving to be Attractive

The DeFi sector is a sprawling ecosystem of decentralized applications (dapps) e.g. decentralized crypto exchanges (DEXs) like Uniswap where you can trade cryptocurrencies directly with others . As you dive into DeFi, you would find a variety of lending platforms where you can borrow or lend digital assets instantly, often with collateral but without lengthy paperwork. Stablecoins (i.e. a form of crypto that carries a stable value) like Tether and USD Coin are commonly used as a form of digital currency in DeFi. They are pegged to traditional assets like the US dollar, acting as the crucial bridge that offer stability within the volatile crypto market.

So, what are the key factors driving DeFi's relentless growth and its potential to reshape global finance?

1. Accessibility & Inclusivity: Anyone with an internet connection can participate, regardless of their geographical location or credit history. This "bank the unbanked" ethos is bringing financial services to billions. After all, should not more money be distributed to the people rather than being hoarded up by just a selective few elites?
2. Transparency & Auditability: Every transaction on a public blockchain is verifiable by anyone, at any time. This radical transparency fosters trust and greatly reduces the risk of fraud or hidden agendas that plague traditional finance. Just imagine the host of benefits that stakeholders can enjoy if anyone can view and track how funds are moved on a public blockchain. Any sector that is rife is corruption will surely benefit from implementing a blockchain system.
3. Efficiency & Cost Reduction: By removing intermediaries, DeFi significantly reduces fees and processing times. Loans can be secured in minutes, and trades executed in seconds, often at a fraction of the cost.
4. Innovation Velocity: DeFi is an open-source movement. Developers from any part of the world can build on top of existing protocols, leading to an explosion of new financial products and services at an unprecedented pace.
5. Interoperability: Different DeFi protocols can seamlessly integrate, creating complex financial "money legos" that offer users unprecedented flexibility and composability in managing their assets.

Web3 Onboarding You Can Try Now

1. One of the first things that Web3 beginners do is to get a 'wallet'. This is a crypto wallet that you can download as a software, app or browser extension. There are many free crypto wallets out there but you can try Metamask or Exodus, which are quite beginner friendly.
2. You should buy some a small amount of Ethereum (ETH) or Solana (SOL) to cover transaction fees. Ethereum is leading in DeFi in terms of quantity of decentralized apps (dapps) but Solana is also rapidly gaining ground.
3. If you are worried about the volatile prices of crypto, you can start off with loading your wallet with a stablecoin e.g. USD Coin (USDC). Depending on which country you reside in, your wallet should allow you to buy crypto directly with your bank's credit or debit card or via a bank transfer. Alternatively, beginners also typically get onboard Web3 by signing up with a local crypto exchange. If you are in Malaysia, you can use my referral code PX6T5Z to get free bitcoin from Luno, a popular crypto exchange.
4. Perhaps one of the simplest way to start off in DeFi is to lend your funds through a DeFi protocol. For example, you can deposit your in Aave and earn interest by supplying assets to the lending network.
5. When you are ready to hold a fairly significant amount of ETH or SOL, you may also stake them rather than let it sit idle in your wallet. There are many staking options around. Your local crypto exchange might have an option to do so or you may also stake your crypto from your wallet.
6. Eventually you will surely find yourself in a situation where you need to swap tokens. Uniswap can be a good platform to learn the workings as their app and browser extension is very easy to use.

Do not be mistaken that DeFi is just an alternative. Instead, it's a parallel financial system being built from the ground up. Even at this early stage, we can get a glimpse into a future where our finance is more open, accessible, and not controlled by a select few elites. It's disruptive, permissionless, and fundamentally changing how we think about money and value.