Cryptocurrency is naturally separated from financial institutions. It’s in its very nature, as a decentralised currency that has no major governing body, there’s nothing to steer it like you see in traditional currencies such as the dollar or the pound. A lot of these decentralised finance (or DeFi) products are built on Ethereum, but why is this the case?
What is Ethereum?
Ethereum is the largest decentralised finance platform on the internet, and it’s easy to see why. Whilst Ethereum has its own native cryptocurrency (ETH) similar to other famous cryptocurrencies such as Bitcoin and Litecoin, Ethereum is also programmable and can be used for much more than just currency and transaction. Developers have built financial applications and complete digital markets on Ethereum, demonstrating just how flexible the platform can be. These features have allowed Ethereum to grow into the biggest blockchain platform online, and means that the user base is thriving.
Why use Ethereum?
Primarily, people use Ethereum for the great degree of flexibility and simplicity that it offers. In part this comes from the lack of centralised organisation controlling Ethereum, users feel as though it is a system they can have complete control over their actions on the platform. This is true, as developers can programme any application they have a need for and it will work exactly how it is programmed to, such is the flexibility offered by the platform.
Additionally, Ethereum offers up a huge amount of opportunities for companies and individuals that may be looking to get involved in blockchain and cryptocurrency. There are hundreds of thousands of active Ethereum addresses, and every one of those represents a business that can be bought from, or a customer that might be interested in buying your products, or app developers that could have the latest innovative ideas. Ethereum is full of people that can be interacted with, and DeFi is what binds them together in the community.
Why does DeFi gravitate towards the platform?
All of the above factors are a big part in Ethereum’s domination of the blockchain system. The openness and ability for anyone to get involved and contribute in whatever way they want played a big role in the growth of Ethereum in the first place, and this was followed up by companies and individuals joining Ethereum because the community already existed there. Whilst some may have joined the platform because of its features, and no doubt they keep doing so to the present day, the majority will have stayed on the platform thanks to its large and welcoming community.
Is it the best place for DeFi?
Yes. Ethereum plays such a major role in the development and facilitation of every step in the blockchain process that any DeFi project that doesn’t use it is at a serious disadvantage. Whether it’s the large and accessible market that already exists on the network or all of the assistance that companies and individuals gain in their projects from Ethereum’s tools, Ethereum is a great benefit to any blockchain project.
