Have you been closely following what has been trending? <\/p>\n\n\n\n
Cryptocurrency is one of the hot topics you probably do not want to miss. <\/p>\n\n\n\n
And from it, concepts like DeFi (decentralized finance) have been born.<\/p>\n\n\n\n
So, what is DeFi (decentralized finance)? <\/p>\n\n\n\n
This is a financial concept that eliminates the need for intermediaries or centralized financial parties. <\/p>\n\n\n\n
It uses an open ledger that is accessible to all users who have different roles such as approving and making changes.<\/p>\n\n\n\n
The DeFi (decentralized finance) operations are done on blockchain technology, which is transparent to all users and secure to avoid infiltration from outsiders.<\/p>\n\n\n\n
The software stack in a DeFi setup has different layers with different functions. <\/p>\n\n\n\n
Layer 0, also called the settlement layer, is the base for all functions. <\/p>\n\n\n\n
This is just the blockchain and native cryptocurrency. Think about the Ethereum platform and the ETH coin.<\/p>\n\n\n\n
Next comes the protocol layer, which acts as the governing rules of operations. <\/p>\n\n\n\n
It sets the standards through which all of the smart contracts are created and ran. <\/p>\n\n\n\n
Multiple users and entities can use the protocols at the same time due to their interoperable nature.<\/p>\n\n\n\n
The application layer is next. <\/p>\n\n\n\n
This is where the consumers and users of the application come in. <\/p>\n\n\n\n
For instance, an application where the consumers can save crypto to earn interest or borrow crypto coins against their saved digital assets.<\/p>\n\n\n\n
Finally, the DeFi (decentralized finance) operations have the aggregation layer. The involved aggregators interconnect the services. <\/p>\n\n\n\n
They provide different services such as crypto exchange or investment through a tech-based framework. <\/p>\n\n\n\n