Decentralized Finance is being built on Ethereum. Ethereum is the choice blockchain for these DeFi apps for several reasons. The reason we chose to build Outlet on the Ethereum blockchain is because of the existing ecosystem. We rely on these other protocols and applications to create the user experience within our app.
People should start to care about DeFi because it is total freedom and you know what is happening with your money. The loans issued by DeFi apps are arguably safer than the loans that traditional banks issue.
DeFi loans need some type of collateral in order to be issued. These loans typically look something like this.
If someone has $200 worth of Bitcoin and would like a loan against that bitcoin they would only receive $100-$150 for $200 worth of assets. Where as with a traditional loan they wouldn't have to put up anything.
DeFi allows anyone to back this loan. The open financial system is still in its infancy but these types of loans will evolve into more elaborate loans in the future.
DeFi gives anyone the right to contribute to these loans and earn the return on the loans. In addition to these loans, there are many other reasons to be excited about the DeFi movement.
People have a real say in what they call value. This new store of value does not need to be recognized by governments so long as the people using this store have a common agreeance as to what value is.The people using DeFi apps today are mostly all Ethereum users or have some type of personal reason behind why they are supporting the decentralized finance movement.
In the broader sense, most people who are interested in cryptocurrency have a similar ideology, and DeFi provides one of the first real use cases for cryptocurrency.
People outside of cryptocurrency should start to care about DeFi because the next generation of DeFi apps are going to have real world implications outside of just cryptocurrency. The first application for the general public is called Outlet.
Outlet automatically connects your funds with other DeFi products and manages the funds to maximize your return. You can use Outlet similar to a bank account. When you deposit dollars they are turned into Dai. Dai is a stable coin on the Ethereum blockchain.
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