DeFi is the abbreviation for “decentralized finance”, an umbrella term for financial products built using blockchain technologies, like smart contracts, and geared toward disrupting the traditional financial system.
Large financial institutions are stuck in the past, have inefficient systems and are burdened with massive overhead. Ultimately, this leads to irrelevant yields and corporations absorbing profits to line the pockets of rich executives. DeFi is finance built for the people, design to be efficient, and coded to maximize return for the individual consumer.
Since the beginning of 2021, DeFi has more than quadrupled from $25 billion to $140 billion total value locked.
Image Source: DeFi Pulse - Nov. 11th, 2021
Even with these staggering numbers, DeFi is still very small compared to the global financial market, which stood at $20.5 trillion in 2020. The technology evolution within DeFi is breathtaking and we expect the growth rate to only accelerate.
For a more insight into DeFi’s growth, check out this article by Circle.
As with any new technology, there is bound to be technical mishaps, software bugs or other detrimental problems. We are always working to mitigate risk and have done extensive research into our partners. Anchor Protocol, the DeFi lending market we use to generate yield, has gone through multiple security audits, implemented a bug bounty program and soon will be backed by a $1B+ insurance protocol. Additional details can be found in their security documentation.
For a more detailed look at DeFi, we recommend reading this article by Investopedia.
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Beema Finance LLC. - 2070 N Broadway 4663, Walnut Creek CA, 97596
