Decentralized finance: A beginner’s guide to earning passive income with DeFi
Decentralized finance (DeFi) is a successful implementation of blockchain technology that serves as a promising alternative to traditional finance. As the name suggests, DeFi is a blanket term used for a variety of financial products and services that run on decentralized blockchains.
DeFi applications (DApps) are built to eliminate the middleman in financial transactions, historically championed by the traditional financial institutions such as banks. The technology does this by implementing a blockchain-based trust mechanism that allows secure peer-to-peer (P2P) transactions without paying a commission to the bank.
Growing use cases around decentralized finance have opened up new avenues for earning passive income for DeFi investors. To generate passive income, investors need to commit their DeFi assets as resources to confirm transactions and execute processes over the proof-of-stake (PoS) consensus mechanism.