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How to address challenges of decentralized finance

These days data and consumer information are operated by large platform monopolies. This is called web2, where a small number of platforms, like Facebook or X, are in control of a large user database. This has raised problems related to privacy, especially in the field of finance. As a means of hedging these risks, web3 offers a decentralized financing system that allows its users full control over their own data and transaction records. Decentralized finance, or DeFi, incorporates the latest web3 technology to allow its users full autonomy over their own assets. Despite its potential, DeFi needs to overcome several challenges in order for it to fully establish itself to the public. With the absence of centralized authorities, there’s an increasing risk of smart contract vulnerabilities and hacking incidents that can result in significant financial losses. Ensuring robust security of the underlying blockchain and smart-contracts is paramount to build trust within the market. Furthermore, interoperability between different blockchain networks needs to be resolved to create a seamless and interconnected ecosystem. As the technology continues to evolve, addressing these challenges will be essential in fully realizing the potential of decentralized finance and the broader web3 paradigm. 김예림 생글기자(한영외국어고 2학년)