What are Distributed Ledger ?
Instead of saving your data in a centralized server/location, this data is shared and synchronized across multiple nodes across the network. Each node has its own copy of the data, which is usually encrypted. Since information is replicated across different nodes, its also called Replicated Journal Technology.
Peer-To-Peer network is required along with a consensus algorithm, to operate a distributed Ledger.
so when a transaction occurs, a new block is created, which holds the information about this transaction, and is forwarded across the other nodes. These nodes update the copy of the ledger that they have to accommodate this new block.
A consensus algorithm basically decides which node has to be added to the distributed ledger.
Distributed Ledger may be permissioned or permission-less. This determines if anyone or only approved people can run a node to validate transaction. They also vary depending on the consensus algorithm. i.g. Proof Of Work or Proof Of Stake.
What Is Decentralized Finance (DeFi)?
Currently we depend on banking systems to hold our money, and if they default holds the possibility of you loosing everything. Or those fees that you are charged on every transaction/ use their services, when you use your money.
Defi solves that problem by decentralizing the banking system. It gives you more control and visibility over your money. It gives you more exposure over the global markets and alternatively to your local currency or banking options. Defi products open up financial services to anyone with an internet connection, and largely owned and maintained by the user itself.
Defi is a collective term for financial products and services that are accessible to anyone with an internet connection. With DeFi, the markets are always open and there are no centralized authorities who can block payments or deny you access to anything. Services that were previously slow and at risk of human error are automatic and safer now that they're handled by code that anyone can inspect and scrutinize.
Lets look into this example. To get a job you need a bank account, to get a bank account you need a house address. so pretty much if your homeless, you don't have access to any financial services, thereby no job. and forever living in the cycle of hell. In DeFi, that does not matter. all you need is an internet connection, and your up and ready!.
Financial service can block you from getting paid. Governments and centralized institutes can close down markets at will. Trading are often limited to business hrs. of a specific time zone! You can transfer money to the other part of the world in seconds. Every step of the way, you've got to pay some ones cut. With Defi. all those problems solved.
Sending money has been made as simple as sending an email. all you need is their wallet address.