There may come a time when blockchain technology will be mostly known as decentralized finance technology. The pace of development in this field has increased to dizzying levels, and it seems as if individuals who are very active in token mining and trading are the most pleased with this growth. DeFi has many potential applications, but the one currently making the most waves deals directly with the improvement of existing systems and networks.
Ethereum is the network where most tokens are issued, mined, and transacted these days. Over the last couple of years, this network has not only become slower but also more expensive to maintain. The cost of transactions has increased as well, which is why DeFi developers have created new and parallel networks that can handle ERC20 token transactions more efficiently.
In a nutshell, the Ethereum blockchain is a technology that aims to provide an immutable record of all interactions and actions over time, without being based on any prior assumptions. The blockchain is not a "currency", but rather a "chain" that can be distributed over many different networks.
The blockchain is designed so that the only transactions that happen on a network are those that take place in the main chain. These transactions are not made in every block, but are only made once on the main chain, and are recorded on it. The main chain tracks a particular transaction's total value. This provides a transparent and permanent record of all interactions. If an entity has more than one copy of a transaction, the transaction is added to the distributed ledger. This process must be conducted with a high level of cryptography, which is where miners come in as they provide their computing and energy resources to keep the network going.
DeFi can be seen as a series of protocols that are alleviating the transaction load experienced by networks such as Ethereum. In the future, these protocols could very well become the mechanisms of banking operations. In the end, DeFi has a very promising future that is not limited to competing against legacy networks such as Bitcoin and Ethereum.