Ethereum blockchain, with its smart contracts functionality, has revolutionized the tech world and opened doors for both decentralized finance (DeFi) and web3. Blockchain technology, no doubt, has the potential to disrupt various industries like financial services, supply chain, healthcare, etc. Similarly, it is very much capable of making the internet more equitable and out of the control of tech giants like Google, Meta, etc. As a result, DeFi swiftly establishes itself as a new paradigm that enables new types of value and utility not previously available in the old financial system. Handling funds in a crypto wallet in a non-custodian way is the beginning of restricting control of third parties over one’s personal assets. This change is influenced by the global financial crisis of 2008-09 that led to the demise of companies like Lehman Brothers. Web3 and DeFi enthusiasts are pretty optimistic that this paradigm will eliminate “too big to fail” strategies used by countries to protect the institutions that unfairly played with the public’s money and put the global financial system at risk. In this article, let’s understand the critical components of DeFi that paved the way for Web3. Key DeFi solutions opening doors for web3 Various DeFi solutions that open the door for web3 include decentralized exchanges (DeXs), lending, borrowing, staking, synthetic assets, stablecoins, and nonfungible tokens (NFTs), as explained below- 1. ...
