Definition
Decentralized Finance, or DeFi, is a blockchain-based financial ecosystem that provides services such as lending, borrowing, trading, and earning interest without relying on banks or financial institutions. DeFi applications are typically built on smart contract platforms like Ethereum and allow users to interact directly with protocols through cryptocurrency wallets. DeFi aims to make financial services more accessible, transparent, and efficient.
Simple Explanation
DeFi is a system of financial services that operates without banks using blockchain technology.
Example
A user earns interest on stablecoins by depositing them into a DeFi lending platform.
Why It Matters
DeFi expands access to financial services and reduces reliance on traditional intermediaries.
Frequently Asked Questions
What does DeFi stand for?
Decentralized Finance.
Does DeFi require a bank account?
No, users interact directly with blockchain protocols.
What services does DeFi offer?
Lending, borrowing, trading, staking, and more.