The Blockchain Net And The Spread of The Decentralised Finance Chain

Billy McDavid
4 min readDec 12, 2023

Digital innovation has significantly improved the financial system. However, the system architecture remains essentially the same.

Still centralized.
Decentralized finance (DeFi) offers an alternative. Use the public
blockchain network to perform transactions.

Instead, these roles are taken over by so-called smart contracts.
A smart contract is an instruction in the form of computer code. The code is stored on a public blockchain and executed as part of System
consensus rules. DeFi protocols can be designed to prevent intrusion and
manipulation. All participants can abide by the rules and make sure everything is running accordingly before participating. Status changes (e.g.
account balance updates) are reflected in the blockchain and visible to everyone. In the context of DeFi, smart contracts are primarily used to ensure the atomic (simultaneous and inseparable) transfer of two assets or collateral.

In both cases, the asset follows the rules of the smart contract and can only be released if predefined conditions are met. By leveraging these characteristics, DeFi can reduce counterparty risk and replicate a large number of financial services without the need for intermediaries or centralized platform operators. This reduces cost and the potential for error. Credit markets, stock exchange…

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