Decentralization is a term you’ll hear a lot in the crypto, web3, and blockchain space. It’s an ideal and an ethos of the entire movement.
The Nakamoto Coefficient is one way to quantify how decentralized a blockchain is: the higher the coefficient, the more decentralized the blockchain.
Validators are computers that verify the state of a blockchain network. The Nakamoto Coefficient is calculated using the # of validators; generally, the more validators a blockchain has, the higher the coefficient. Therefore, more validators = more decentralization.
A major contributing factor to the redistribution of information and data from centralized corporations is the open source nature of smart contract code.
Finally, borderless value exchange is the opportunity to interact with anyone across the entire globe - not just within your country - through these distributed blockchain networks. In the case of DeFi, financial value is being exchanged through trading, borrowing, lending, and the like. But the key aspect here is you don’t need your bank’s permission to exchange this value, you have the freedom to choose when and how you do it.
Next, we’ll look at how DeFi benefits the public.