DEFI: What is Defi? How does it work? Click here to know the details...
DeFI is a decentralized finance facility. It is based on Blockchain technology. In this, users get many facilities. It has the facility of borrowing and lending in cryptocurrencies. A new alternative to the age-old centralized finance facility is DeFI. It can be understood as a banking system. For those who are not aware of DeFI, centralized finance can be understood from the banking system. The banking system restricts people from owning and controlling their assets. But DeFi on cryptocurrencies gives you full rights to your assets. Meaning without any limit and any interference, you can do the work of withdrawing money, borrowing and depositing money.
What is the importance of DeFi?
DeFi does not rely on any third party or broker for transactions. There is no centralized authority involved. Its entire transaction is done through a different technology. It is algorithm based blockchain technology.
Funds can be transferred instantly. Transaction rates are lower as compared to the old banking system. All transactions made by users on DeFi are stored in a database that can be viewed by everyone. This leads to more transparency in doing transactions. Central financial agencies do not interfere in this.
DeFI does not do public transactions of people. It does not even require KYC. Takes full care of the privacy of the users. With a crypto wallet, you will be able to use the DeFi platform.
How are cyber attacks?
There is always an open source code in DeFi. Its protocol can always be read. But there may be changes in this. But cybercriminals take advantage of this. Taking advantage of the flaws in the code, they commit fraud. The flaws in the security of DeFI cannot be checked. This makes it easy for hackers to target.
There are two types of cyber attacks
In the year 2021, the case of 'Rug Pull' came to the fore. In this, 36 percent people had a loss of more than $ 2.8 billion (about Rs 280 crore). Rug Pull is a magical practice. In this, crypto developers abandon a project and run away with investors' funds.
Hackers have identified a bug in the DeFi protocol. All those who gain access to crypto wallets take money out of DeFi.
DeFi platforms are exposed to external threats. This happens because of a data breach.
How is DeFi secured?
Check whether the protocol is fully tested before using DeFi. Whether that audit has been done by any well-known audited agency or not. Do not share your crypto wallet passcode with anyone. Users should not always invest money in such a place to avoid big losses, which suddenly give big returns in a day. There are more risks of investing in such a place. Users are advised to stay away from potential honeypots. Users should stay away from any scam advertisements. Users should always check their way. A tried and tested protocol is better. Always do basic security checking.