One of the keys to financial success is to have control over your money. This is the most fundamental concept underlying almost all defi use cases. Because we live in a complex economy, this control is essential both for investing and protecting wealth. Yet, almost every bank and institution is based on the opposite.

In exchange for financial services, you delegate control to other companies. You have to trust and hope that they’ll manage your money safely. That they won’t make mistakes, have conflicts of interest, change term conditions, suspend your account, have cyber-attacks, or go out of business in uncertain times like these.

If you trust traditional finance, you’ll soon find out how all these problems make it unreliable. Thankfully, blockchain innovations have brought a new approach to money. It removes trust from the equation (along with all issues that it causes), and it’s called decentralized finance.

What is Decentralized Finance (DeFi)?

Decentralized finance is the application of public blockchains to financial sectors. The main difference with centralized finance (CeFi) is that DeFi platforms have no central authority. They’re run by autonomous programs called smart contracts, which manage all balances and can’t be manipulated. 

DeFi apps make finance simple by removing all the complicated steps we once needed to guarantee security. Trust is replaced with a fault-tolerant algorithm (the consensus model), which allows users to directly exchange assets and services. Instead of trusting an exchange broker or a bank, you can instead:

  • Manage crypto assets from a non-custodial wallet that needs no registration
  • Borrow or lend at low collateral, no repayment schedules, 0% interest, and no credit score checks.
  • Provide liquidity to other platforms to earn low-risk passive income
  • Add multiple wallets nodes in case you lose it or someone gets access
  • Safely transfer large amounts across the world within seconds for less than $1

The way we interact with DeFi is by connecting a wallet to different financial apps. 

Complete List of DeFi Use Cases

The list of DeFi use cases gets longer every year. And while there might be thousands of financial dApps, most of them fall under these 11 types:

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