Blockchain growth and smart contracts in cryptocurrency: deep diving in decentralized finance
The world of cryptocurrencies has undergone an enormous growth and evolution from its beginning. The objective of this revolution is a new paradigm of decentralized financing, facilitated by blockchain technology and intelligent contracts. In this article, we are immersed in the role of smart contracts in cryptocurrency and we explore the impact on decentralized financing (Defi).
What are intelligent contracts?
The intelligent contracts themselves deal with the conditions of the agreement, directly in the code series. They were first introduced by Nick Szabo Cryptographer and computer scientist in 1997, but only in 2014 was widely accepted by Vitalik Buterin by Ethereum (ETH).
Intelligent contracts are key elements of blockchain technology that allow you to automate your own implementation of decentralized applications (DAPPS). The data are stored and controlled, executed, and the transactions are organized without the need for government or government authorities.
The role of smart contracts in cryptocurrency
Cryptocurrencies such as Bitcoin, Ethereum and others are based on smart contracts to facilitate peer transactions and automate various processes. These contracts are stored in a decentralized register called blockchain which ensures their immutability, transparency and safety.
Works like this:
- Initiative : The sender initiates a transaction with a recipient with a smart contract.
- Implementation of an intelligent contract : The transaction is performed on blockchain, and the conditions of the agreement are stored as a code.
- Blockchain checking : The transaction is justified by the blockchain knot network, ensuring its authenticity and integrity.
Decentralized Finance (Defi)
Defi refers to the intersection of cryptocurrency markets with traditional financial products and services. It is a decentralized ecosystem that allows users to interact with various assets, loans, loans, trade and stabhecoin without necessary intermediaries, such as banks or scholarships.
Defi growth is driven by the increasing acceptance of smart contracts and blockchain technology. Here are some key aspects of Defi:
- Loans and loans : Users can borrow and borrow cryptocurrencies using decentralized lending platforms, such as AAVE and compound.
- Stablecoins : Stabrecoin stoves allow users to trade stabrecoine (such as USDT) with other cryptocurrencies or Fiat values.
- Derivative transactions and lever : Derived products trading platforms allow users to speculate the movements of cryptocurrency prices.
Impact of smart contracts on Defi
Intelligent contracts have revolutionized Defi operation, giving many advantages:
- Efficiency : Automation reduces transaction costs, increases efficiency and reduces customers risk.
- Safety
: Blockchain technology ensures the integrity and unchanging transactions, protecting users against computer threats.
- Transparency : Intelligent contracts offer transparent records of all transactions, allowing users to monitor their fortune and make good decisions.
Future challenges and directions
While intelligent contracts have transformed Defi, they also have challenges:
- Regulatory uncertainty : Governments continue to struggle with Defi regulation, which leads to users’ uncertainty.
- Scalability
: The scalability of blockchain technology remains, limiting the adoption of Defi platforms.
To solve these challenges, researchers and developers examine new concepts, for example:
- Multi -architecture architecture : Integrate more blockchain to improve scalability and reduce costs.
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