Decentralized finance (DeFi) is a new way to handle money that uses computer networks called blockchains. It’s like having a global bank without any actual banks involved. It wants to make banking services more accessible and cheaper by eliminating the middlemen, like banks, and offering chances to make more money.

But, DeFi can be hard to understand and use, so only a few people use it. For example, in 2023, the amount of money in DeFi systems fell from $175 billion to just $50 billion.

DeFi Trust Crisis Addressed by Innovative Blockchain Solutions

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• DeFi is tricky to understand, which makes it hard for everyone to use.
• Clever projects are working on making DeFi easier and more precise for everyone.
• Even though there are some problems now, DeFi is expected to become more popular.

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Adam Simmons, who works at a Radix company, says DeFi is often too complicated for regular people. For example, DeFi requires you to keep track of your money and remember a unique password called a seed phrase. If you lose this seed phrase, you could lose all your money. This fear became real in 2023 when DeFi systems lost about $1.95 billion due to security issues and market changes.

But there’s hope. Companies are working on ways to make DeFi easier to use and understand. For example, Radix has developed features that let users quickly see what’s happening with their money. They also have a feature that ensures users get the expected amount of money from their transactions, even if prices change quickly.

Another company, Elixir, is working on making it easier to trade tokens (a kind of digital money). They’re doing this by connecting with popular apps like Robinhood.

Bitcoin DeFi is also becoming more popular because of the development of Bitcoin layer-2 networks. Rena Shah, who works at TrustMachines, thinks Bitcoin DeFi is an important part of the crypto world. She believes the recent approval of a Bitcoin spot ETF in the US will encourage more people to use Bitcoin DeFi.

Even though DeFi is facing some problems, people like Simmons are hopeful about its future. He believes that more and more people will start using DeFi slowly and steadily. He also thinks that the rules and laws around DeFi must change to keep up with these new changes.

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