Top 5 Challenges In Applying DeFi in Real Life
The term DeFi sounds heavy in the recent air and this new system of decentralized finance has the ability to shift the financial sector to the next level with transparent and permissionless financial transactions.
Already we have discussed a lot more stuff about this DeFi - Decentralized Finance, such as What is Decentralized Finance (DeFi) ?, Predictions of DeFi, how DeFi can reshape global traditional finance?, Major Use-cases of DeFi and more.
Here we are going to discuss the major challenges one might face in applying this DeFi in the real time.
Challenges In Applying DeFi in Real Life
Some of the major challenges that we face in applying the concept of DeFi in the real life is as follows:
Availability of Fiat on/off ramps
Both the off and on-ramps are not quite symmetric. The problem behind the mass crypto adoptions can be broken into three, which is in turn the problem in implementing DeFi into the real world.
- Getting into Cryptos from Fiat.
- Managing Volatility of Cryptos
- Getting out of Cryptos.
These struggles between fiats and cryptos make a harder place to implement DeFi.
As DeFi is on the decentralized blockchain, the scalability issue occurs which prevents DeFi from implementing into the usage in the real financial world. As most of the DeFi dapps rely on the Ethereum blockchain network which requires high gas costs for every transaction is also a major issue.
Lack of Privacy
The permissionless nature of DeFi drives it to the state of lack of Financial Privacy and this threaten the people to incorporate DeFi for their financial businesses.
Lack of Identity
DeFi faces many challenges such as credit scores which leads to the situation of over-collateralization requirements. This is also one of the major challenges in applying decentralized finance in the real world.
Smart Contract Vulnerability
Even though the smart contracts of DeFi are coded with high-end security and audited before implementing into adoptions, many DeFi platforms face smart contract vulnerability which leads to a lack of insurance.
These are the major challenges involved while incorporating DeFi in the real world.
By overcoming these major challenges and applying DeFi , we can enjoy more benefits in Financial Services.
Benefits of Applying DeFi in Real World
Here are some of the benefits we may acquire by utilizing DeFi - The New Decentralized Finance.
- Ultra Transparent Transactions
- Completely Permissionless
- Self Custody of Assets
- Globally Accessible
- Highly Immutable and more.
We Bitdeal, being a Leading DeFi Development Company try to bring DeFi based Financial Sector through our A to Z DeFi Development Solutions and Services.
Stay Tuned with us to know more about DeFi !!