💵DeFi | Decentralized Finance

Decentralized Finance is the foundation of the Viralata Finance ecosystem. DeFi is a way of investing/reserving value that goes beyond banking tradition.

This new type of finance emerged around the years 2016/17 thanks to the application of smart contracts on the Ethereum network. Since then, many other networks have become compatible with smart contracts and the market is booming.

The premise is simple: There is no centralizing body or a single person with decision-making power. The processing and decision power is collective, using highly distributed networks and powerful consensus algorithms to validate a transaction.

The end of the need for an intermediary entity narrows paths and removes barriers in an increasingly globalized world. Distances from money shorten and bureaucratic barriers disappear. It's not hard to find articles on the internet claiming that DeFi is making a revolution in the global economy.

“DeFi may lead to a paradigm shift in the financial industry and potentially contribute toward a more robust, open, and transparent financial infrastructure.” - Federal Reserve Bank of St. Louis

Bringing this to our reality, it was as if it was no longer necessary for a bank to arbitrate whether this money actually belongs to you or not. That role is now performed by the network of servers that make up a blockchain. This network, in turn, is assembled with different algorithms and strategies to prevent fraud and attacks. The interaction with smart contracts allows investments, loans and different financial activities to be made between you and a programmed logic (contract), without depending on an intermediary consuming fees or regulating what you can or cannot do.

🧾pageSmart contracts

In the case of REAU, the smart contract determines that 5% of every transaction is consumed in fee, with 2% being proportionally redistributed to all portfolios that have REAU. Especially in the case of REAU, not even the contract rate can be changed, making the contract work forever and can be traded. This contract is operated by a network of validators, currently made up of more than 21 nodes that together have around 12 million BNBs in voting power (approx. 18B reais).

But not everything is perfect in the DeFi world. Decentralization and the lack of a centralized/regulatory entity means that there is not much to turn to in cases of fraud and error. For this reason, it is always recommended to stay alert and not perform operations that you are not sure what you are doing. If you are going to venture out, always risk a small amount until you learn how to work.