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How DeFi Is Changing Traditional Finance

Traditional finance has long been criticized for its lack of transparency and high barriers to entry. In contrast,

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How DeFi Is Changing Traditional Finance

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  1. How DeFi Is Changing Traditional Finance Traditional finance has long been criticized for its lack of transparency and high barriers to entry. In contrast, DeFi protocols www.lbmsolutions.in

  2. Elimination of Intermediaries In the traditional financial system, intermediaries like banks, payment processors, and loan providers play a significant role. They not only increase the cost of financial services but also slow down transactions. **DeFi** eliminates these intermediaries, providing faster and more efficient services at a fraction of the cost.

  3. INNOVATION THROUGH PROGRAMMABLE MONEY In traditional finance, money is largely static – it exists as a medium of exchange. In **DeFi, however, money becomes programmable, thanks to smart contracts. This means that funds can be automatically moved, allocated, or invested according to predefined rules, without the need for human intervention. This flexibility is paving the way for new financial products and services that were previously unimaginable.

  4. High Volatility While **stablecoins** offer some protection from volatility, many **DeFi assets** remain highly volatile, making it difficult for users to accurately predict returns. This volatility can also increase the risk of liquidation for borrowers, especially in margin trading and lending scenarios. Scalability Issues As **DeFi** continues to grow, the scalability of existing blockchain networks becomes a concern. **Ethereum**, the primary blockchain for **DeFi protocols**, has struggled with network congestion and high transaction fees, which can limit accessibility for smaller users.

  5. The Future of DeFi The **DeFi** space is still in its infancy, but its potential is enormous. As more people begin to understand the benefits of decentralized financial systems, DeFi adoption is likely to accelerate. With ongoing developments scalability, security improvements, and regulatory clarity, DeFi could become a cornerstone of the global financial system. in blockchain Innovations like cross-chain interoperability, which allows assets and data to move between different blockchains development, and privacy-focused DeFi protocols, which aim to enhance the confidentiality of transactions, will further propel the growth of decentralized finance.

  6. Challenges Facing DeFi Security Risks Because **DeFi platforms** rely on **smart contracts**, they are vulnerable to bugs or exploits in the code. Unlike traditional finance, where users are often protected by insurance or legal recourse, errors or hacks in **DeFi protocols** can result in significant financial losses with little to no recourse. Lack of Regulation The decentralized nature of **DeFi** means that it operates largely outside of existing regulatory frameworks. While this provides greater freedom and innovation, it also opens the door to fraud, scams, and market manipulation. As **DeFi**

  7. Thank You For your Attention Contact Us: 91-8448443318 www.lbmsolutions.in info@lbmsolutions.in Nagar,(Mohali) Punjab 140308

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