Well, regulators have argued that despite the name, stablecoins arenвЂ™t actually that stable.ДЄs my colleague, Jeanna Smialek, explained in an article on stablecoins last year, the worry stems from the fact that stablecoin issuers arenвЂ™t legally required to back their coins one-to-one with safe, cash-like assets. ItвЂ™s what DeFi people jokingly call traditional finance.Д¬lever. You want a crypto coin that behaves like a boring, stable dollar, which you can use without needing to interact at all with the TradFi system. Stablecoins are a critical part of DeFi markets, because if youвЂ™re a crypto investor, you donвЂ™t want to constantly be changing tokens back and forth to dollars, or keeping all your assets in cryptocurrencies whose values might fluctuate wildly. Stablecoins are cryptocurrencies whose value is pegged to the value of a government-backed currency, like the U.S. The best example is probably stablecoins. In short, because DeFi is mostly unregulated, with few of the consumer protections and safeguards that exist in the traditional financial system.Д¬an you give me an example of something that would be regulated in the traditional financial system, but isnвЂ™t regulated in DeFi?

comptroller of the currency, said in a speech at a blockchain conference in September that many DeFi products reminded him of the credit default swaps and other complex derivatives that were popular on Wall Street in the years leading up to the 2008 financial crisis.ДЄnd Senator Elizabeth Warren, the Massachusetts Democrat, singled out DeFi in a December crypto hearing, calling it вЂњthe most dangerous part of the crypto world.вЂќ Or you could take a cue from regulators and politicians, who are increasingly looking to DeFiвЂ™s growth with concern. You could also look at trading activity on decentralized exchanges, which has grown by triple-digit percentages in the past year. isnвЂ™t the only way to measure DeFiвЂ™s growth. That would make DeFi something like the 38th largest bank in the United States by deposits, if it were a bank. a standard way of measuring the value of crypto held in DeFi projects - is currently about $77 billion, according to DeFi Pulse. How big is DeFi?ДeFiвЂ™s total value locked or T.V.L.

Wild West Wall Street! OK, now IвЂ™m interested. But DeFi also includes things like lending platforms, prediction markets, options and derivatives.Д«asically, crypto people are building their own version of Wall Street - one that is largely decentralized and deals exclusively in crypto, with crypto versions of many of the products offered by traditional financial firms, and without much of the red tape and regulations that govern the existing financial system. So DeFi is cryptoвЂ™s version of a stock exchange? Instead of transacting through banks and stock exchanges, people trade directly with one another, with blockchain-based вЂњsmart contractsвЂќ doing the work of making markets, settling trades and ensuring that the entire process is fair and trustworthy. In DeFi, those middlemen are replaced by software. And in order to feel comfortable doing the transaction, all parties need to trust that those intermediaries will act fairly and honestly. To send or receive money in the traditional financial system you need intermediaries, like banks or stock exchanges. What do you mean by вЂњusing blockchains to replace traditional intermediaries and trust mechanisms?вЂќ ItвЂ™s an umbrella term for the part of the crypto universe that is geared toward building a new, internet-native financial system, using blockchains to replace traditional intermediaries and trust mechanisms. DeFi (pronounced dee-fye) is short for decentralized finance.

Largest defi coins