From what we’ve seen so far, DeFi certainly has the potential to benefit traditional finance. But as with any transformative technology, DeFi’s potential is not limited to just improving on the current status quo. Rather, its true strength lies in its ability to disrupt the space by enabling new types of financial products and services. Even at this early stage, the technology is showing great promise in that regard. It is already changing the way people manage their assets, borrow and lend money, and trade online. Here are just some of DeFi’s most prominent use cases:

Lending and borrowing

DeFi has enabled the development of peer-to-peer lending and borrowing solutions that bring significant benefits to the end-user. These services come with cryptographic verification mechanisms and smart contract integration that eliminate intermediaries such as banks that typically verify and process lending and borrowing transactions. This makes the process much cheaper and faster, while still making sure that the counterparties involved in a transaction are protected. Other benefits include instant settlement of transactions and greater accessibility.

Lending and borrowing dApps are among the most popular DeFi applications. One platform that has become particularly popular in this category is Compound. Lenders on the platform can supply crypto assets to a number of lending pools that are available for other people to borrow from. For these lenders are entitled to a share of the interest borrowers payback to the pool. The interest rate a lender earns is based on their contribution to the pool, as well as the liquidity of the crypto assets.

From what we’ve seen so far, DeFi certainly has the potential to benefit traditional finance. But as with any transformative technology, DeFi’s potential is not limited to just improving on the current status quo. Rather, its true strength lies in its ability to disrupt the space by enabling new types of financial products and services. Even at this early stage, the technology is showing great promise in that regard. It is already changing the way people manage their assets, borrow and lend money, and trade online. Here are just some of DeFi’s most prominent use cases:

Lending and borrowing

DeFi has enabled the development of peer-to-peer lending and borrowing solutions that bring significant benefits to the end-user. These services come with cryptographic verification mechanisms and smart contract integration that eliminate intermediaries such as banks that typically verify and process lending and borrowing transactions. This makes the process much cheaper and faster, while still making sure that the counterparties involved in a transaction are protected. Other benefits include instant settlement of transactions and greater accessibility.

Lending and borrowing dApps are among the most popular DeFi applications. One platform that has become particularly popular in this category is Compound. Lenders on the platform can supply crypto assets to a number of lending pools that are available for other people to borrow from. For these lenders are entitled to a share of the interest borrowers payback to the pool. The interest rate a lender earns is based on their contribution to the pool, as well as the liquidity of the crypto assets.