Decentralized finance DeFi refers to a blockchain-based ecosystem of financial services and products that operate without traditional intermediaries like banks or brokerages. Instead, DeFi uses smart contracts on programmable, permissionless blockchains to provide services such as lending, borrowing, trading, and earning interest on savings.
Here are some key features of DeFi:
- Permissionless Access: Anyone with an internet connection can access DeFi services, regardless of their location or financial status. I
- Transparency: Transactions and smart contracts are open-source and can be audited by anyone, ensuring transparency and trust.
- Interoperability: DeFi applications can interact with each other, creating a highly composable financial system.
- Reduced Counterparty Risk: Since there are no intermediaries, users don’t need to trust a third party to hold their funds.
- Global Reach: DeFi services are available to anyone globally, breaking down geographical barriers.
However, DeFi also comes with risks, such as coding errors, hacks, and regulatory challenges. It’s important to do thorough research and exercise caution when participating in DeFi activities.
Does this help clarify what DeFi is, or do you have any specific questions about it?