DeFi

DeFi stands for Decentralized Finance—an open financial system built on public blockchains (like Ethereum) where users interact directly with smart contracts instead of banks or brokers.

What DeFi includes

• Borrowing and lending: Protocols let you supply crypto to earn interest or borrow against your assets by locking them as collateral.

• Trading: Decentralized exchanges (DEXs) allow peer‑to‑peer trading via automated market makers (AMMs) instead of order books.

• Yield and liquidity: Users can provide liquidity to pools and earn fees or rewards from protocol activity.

• Derivatives and synthetics: On‑chain markets for options, futures, and synthetic assets that track stocks, commodities, or indexes.

• Payments and stablecoins: Stablecoins act as the “cash layer” of DeFi, enabling transfers, savings, and on‑chain settlements.

Key characteristics

• Non‑custodial: You keep control of your wallet and assets; protocols never “hold” your money like a bank account.

• Programmable: Smart contracts automate rules for interest rates, liquidations, and payouts.

• Transparent: Positions, collateral, and protocol rules are visible on‑chain.

• Global and permissionless: Anyone with a wallet and internet can access DeFi services, subject to local regulations.