What is decentralized finance?
According to Earnity CEO Dan Schatt, decentralized finance, also known as DeFi, is a rapidly growing area of the cryptocurrency industry that refers to the shift from traditional financial systems to peer-to-peer finance enabled by decentralized technologies built on the Ethereum blockchain.
A new paradigm
With DeFi, Dan Schatt mentions that users can access various financial services without the need for centralized intermediaries and arbiters, such as banks or other financial institutions.
This new paradigm of finance can disrupt the existing financial system by providing greater access to global financial markets and services while simultaneously reducing costs and risks associated with traditional financial systems.
When venturing into the world of decentralized finance, there are a few best practices to keep in mind.
Keep these best practices in mind
First, do your own research. The DeFi space is still quite shiny, new, and constantly evolving, so it’s important to stay updated on the latest developments.
Second, be cautious with the amount of money you put in. DeFi protocols are still in their early stages and are thus more susceptible to hacks and errors. As such, it is important not to risk more than you can afford to lose.
Third, use a trusted wallet provider. Since DeFi protocols are constructed on top of the Ethereum blockchain, it’s important to use a wallet compatible with Ethereum. Popular options include MetaMask, Trust Wallet, and Coinbase Wallet.
Finally, Earnity CEO Dan Schatt reminds buyers to diversify their purchases. Don’t put all your hard-earned eggs in one basket by putting your money only in one DeFi protocol. By diversifying your purchases, you will be able to mitigate potential money lost should a particular protocol fail.
By following these best practices, Dan Schatt and Earnity say you will be well on your way to success in decentralized finance.