Decentralized Finance

"Blockchain technology is a distributed ledger technology that distributes data storage to computer nodes linked in a network. With the encryption process, the storage blocks are connected as a chain, and each block has a mathematical value (hash) of the previous block to verify its validity. Therefore, data can be stored as a single data set without the need for a centralized controller, which reduces data manipulation risk."

With several fundamental features of blockchain, many developers and researchers see the potential of using this technology to solve traditional financial problems. Thus, when integrating blockchain with conventional finance, the new era of innovated finance is created as Decentralized Finance.

Decentralized Finance is a general context of financial services that are built based on the decentralization concept. It has some important aspects as follows:

• It is an open-source technology.

• It uses smart contracts to govern the system.

• It uses the economic reward concept.

• It has decentralized governance.

These aspects considerably increase the efficiency of financial service management. However, Decentralized Finance comes with some precautions and risks, such as consumer protection risk, loss of capital risk, and the complexity of its governance.