OKX Blockchain 60 Lectures | DeFi Part, Episode 6: What Impact Has DeFi Brought?

Hello everyone, I'm Xiao K. Today we'll be discussing: "What Impact Has DeFi Brought?"

DeFi is an umbrella term for decentralized finance. We've previously covered the operational logic of various DeFi sectors in detail, including decentralized lending, DEX, aggregators, decentralized insurance, and more. The most fundamental difference between DeFi and traditional finance lies in the fact that the DeFi model is a completely free, decentralized network model that does not rely on any traditional centralized financial institutions, which allows it to largely overcome the shortcomings of the existing financial system.

So today, let's summarize what impacts DeFi can actually bring us. Put simply, DeFi's impact mainly falls into three areas:

First, DeFi lowers the barriers to accessing financial services. As we all know, in the traditional financial system, certain prerequisites must be met in order to enjoy financial services. For example, if you want to take out a loan, you need a good credit standing and assets as collateral; if you want to invest, you need a certain level of capital reserves as a qualification.

In such circumstances, many people may be excluded from the financial services system due to insufficient qualifications. Yet it is often these very people who need access to such financial services the most.

Because DeFi incorporates the technical features of blockchain, its essence is a financial network that everyone can freely participate in. This characteristic determines that it can solve the trust problem of prerequisites, effectively ensuring trading security between parties without relying on third parties. Users can use all financial services according to their own will, without needing approval from any institution.

Second, DeFi shortens financial processing workflows and solves the black box problem. When we deposit money, take out loans, or trade in our daily lives, third-party financial institutions are always involved. All financial transactions are not completed directly but require a detour through institutional intermediaries to handle our transactions. In this process, they act like black boxes—extremely opaque. We don't know how they process data, whether they infringe on our rights, or how they commercialize our data.

DeFi removes these third-party institutions through blockchain technology, allowing users to conduct financial transactions peer-to-peer. This significantly reduces users' financial costs. Furthermore, data processing through smart contracts written in code makes data more trustworthy and transparent, solving the institutional black box problem.

Third, DeFi brings more possibilities. In truth, after traditional finance has developed to this point, the range of products available to us—whether for wealth management or insurance—is limited. DeFi takes a different path from traditional finance from the ground up. Its transactions occur more directly between users, and users have the authority to provide feedback on product design details. So, just like a new continent, it has the potential to give rise to more business models, more diverse products, and consequently, more innovation.

Therefore, overall, DeFi's impact is multifaceted. Perhaps for a long time to come, traditional finance and decentralized finance will coexist. But DeFi is like an innovator in the old world. Its significance lies not in overthrowing the existing system, but in bringing us more choices in such a centralized world of power.

Thanks to kevinshao for the help and guidance on this episode.

Sina Weibo: @邵建良kevinshao

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