DeFi is a trend in the blockchain industry that creates analogues of traditional banking instruments using cryptocurrencies and blockchain technologies. DeFi consists of two elements:
▪️dApps-decentralized applications. In them, users perform actions, and applications record these actions on the blockchain.
▪️DeFi tokens are tokens that are created and used in these decentralized applications. They are used by users to perform actions in applications.
🪙 DeFi tokens can be purchased separately on exchanges and traded but their main purpose is to be used in DeFi projects.
🔺Cryptocurrency and DeFi are separate areas of the cryptocurrency industry.
DeFi applications use both the cryptocurrencies themselves and the blockchain technology on which they are based.
🛠DeFi applications are a tool for working with cryptocurrency. They provide new opportunities for using cryptocurrency and earning money on it. Different types of decentralized finance provide different opportunities for working with cryptocurrency.
💸Let’s draw an analogy with fiat currencies and banks:
✔️Fiat currencies are used in the operation of banks;
✔️Banks are expanding the use of fiat currencies. With their help, you can take loans, earn on deposits, exchange one currency for another;
✔️Although banks and fiat currencies are not the same thing, they are part of the banking system.