Decentralized Finance (DeFi)
Financial services built on blockchain technology that operate without traditional intermediaries.
Definition
Decentralized Finance (DeFi) refers to financial services and applications built on blockchain networks that operate without traditional intermediaries like banks, brokerages, or exchanges. DeFi protocols use smart contracts to automate lending, borrowing, trading, insurance, and yield generation. Users interact directly with protocols through crypto wallets, maintaining custody of their assets. Major DeFi categories include decentralized exchanges (Uniswap, Curve), lending platforms (Aave, Compound), and yield aggregators (Yearn Finance). Total value locked (TVL) in DeFi has reached tens of billions of dollars. While DeFi offers permissionless access and transparency, risks include smart contract vulnerabilities, impermanent loss, and regulatory uncertainty.
Related Terms
Smart Contract
A self-executing program stored on a blockchain that automatically enforces agreement terms.
CryptoEthereum
A decentralized blockchain platform that enables smart contracts and decentralized applications.
CryptoBlockchain
A decentralized, distributed digital ledger that records transactions across many computers.
CryptoCryptocurrency
A digital or virtual currency secured by cryptography that operates on decentralized networks.