DeFi Primitives
What are the primitive components of the DeFi ecosystem that serve a specific and unique financial function.
One or more financial primitives / instruments can be combined to create application protocols.
| Primitive | Ethereum | Solana |
|---|---|---|
| Bonds | ||
| Collateralised Lending | AAVE | |
| Derivatives (Futures, Options, Perpetuals, Swaps, Forwards) | ||
| DEXs (AMM) | ||
| DEXs (Orderbook) | ||
| Flash Loans | ||
| Insurance | ||
| Marketplaces | ||
| Optimisers |
Purpose
Transparent logic defines how transactions are processed while Off-chain services provide necessary data and triggers to apply those trading rules.
- TradFi has transactions processed by a central authority governed by human processes.
- DeFi automates the transaction settlement process with minimal human intervention.
- DeFi logic is transparent, meaning everyone can see how a transaction will be processed.
Benefits
Some of the key attractions of DeFi for many consumers are:
- Eliminates the fees that banks and other financial companies charge for using their services
- Control your money in a secure digital wallet instead of needing a bank
- Anyone with an internet connection can use it without needing approval
- You can transfer funds in seconds and minutes