High School

Which statements characterize decentralized finance (DeFi)?

1. Decentralized finance is a system that operates on a blockchain.
2. DeFi allows users to access financial services without the need for intermediaries.
3. DeFi applications are only available to a select group of individuals.
4. DeFi is not regulated by any governing body.

Answer :

Final answer:

Decentralized finance (DeFi) characterizes systems operating on a blockchain, providing financial services without intermediaries, and being open to anyone with Internet access, not just a select group. DeFi is largely unregulated by any governing body.

Explanation:

Decentralized finance (DeFi) is characterized by a handful of key attributes. Firstly, DeFi is indeed a system that operates on a blockchain, offering financial services that are enabled by this technology. Secondly, it allows users to access these services without needing traditional financial intermediaries, such as banks, and thus promotes a more direct interaction between parties in the financial ecosystem. However, the statement that DeFi applications are only available to a select group of individuals is incorrect; indeed, one of the core principles of DeFi is its openness and accessibility to anyone with Internet access and a suitable digital wallet. Lastly, DeFi is indeed largely unregulated by any single governing body, operating instead in a global, borderless context where users are governed by the code of smart contracts.