One of the most attractive parts of DeFi for people is that it eliminates the barrier to entry for many of these financial transactions. You no longer have a government or corporation manage your money or need to qualify for certain financial products.
Using traditional financial systems, you apply for a loan and may be rejected based on your credit. You have a bank account or investment brokerage with a company that oversees your money.
With DeFi's smart contracts, certain financial transactions are executed after specific conditions are met. The smart contracts allow for borrowing, lending, and more and the terms of the transaction are literally written in the code. While that makes these transactions easy-to-use and more efficient, it can also make them more susceptible to errors that can't be fixed.
Because of these smart contracts and the ability for Ethereum to create applications, DeFi can be used:
As a lending network, which offers peer-to-peer borrowing and lending
Through decentralized exchanges, where users can exchange one type of currency for another. For example, trading ether for US dollars
For betting, where users bet on potential outcomes of certain events
As stablecoins, which connect a type of cryptocurrency to a more traditional type of currency like the US dollar, in order to lower price volatility and add more stability
Is DeFi only Ethereum?
Cardano is a public blockchain platform. It is open-source and decentralized, with consensus achieved using proof of stake. It can facilitate peer-to-peer transactions with its internal cryptocurrency, ADA.
Cardano was founded in 2015 by Ethereum co-founder Charles Hoskinson. The development of the project is overseen and supervised by the Cardano Foundation based in Zug, Switzerland.It is the largest cryptocurrency to use a proof-of-stake blockchain, which is seen as a greener alternative to proof-of-work protocols.