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DeFi tokens represent a diverse set of cryptocurrencies native to automated, decentralized platforms that operate using smart contracts. These provide users’ access to a suite of financial applications and services built on the blockchain.
Decentralized finance tokens provide crypto users with access to a number of bank-like services such as loans, lending and insurance.
Decentralized finance (DeFi) tokens command a $45 billion market cap, a relatively small proportion of the overall cryptocurrency market. That being said, it has become one of the fastest-growing sectors in the industry.
Most DeFi tokens are linked to DeFi protocols, which, in some instances, are governed almost entirely by their community of users.
To participate in the future decision-making processes of these types of DeFi platforms, users are required to purchase and hold what’s known as “governance tokens.” These tokens possess special rights and allow holders to vote on proposed changes to the platform. These votes are nominally binding on the developer team and their values are often proxies for confidence in the project.
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Analysis – “DeFi tokens are the crypto players that aim to give power to their users. It is governed democratically and is the alternative Centralized Finance (CeFi). The article gives a basic outline of the concept and construct of how it works.
The talk about, and investing in DeFi are all speculating and hoping for a future that is decentralized, while at the same time demonstrating proof of concept by performing and existing on its own smart contracts” – Easton Nguyen
