Traditional finance relies on institutions such as banks to act as mediators and courts to provide arbitration.
DeFi apps don’t need any mediators or arbitrators. The coding outlines how each potential conflict will be resolved, and users always retain control over their money.
This automation makes the expenses of producing and consuming these products less expensive and promotes a less complicated financial structure.
Single points of failure are eliminated because these new financial services are built on top of blockchain technology. Because the data is stored on the blockchain and dispersed among hundreds of nodes, it is difficult to censor or potentially shut down a service.
The ease of access for people who otherwise wouldn’t have any access to financial services is a significant benefit of such an open environment.
In areas with low-income residents, intermediaries’ services are generally lacking because the old financial system depends on them making a profit.
DeFi, on the other hand, drastically lowers the expenses and gives low-income people access to a wider choice of financial services.