What is Decentralized Finance

Decentralized finance, commonly known as DeFi, is a financial system built on blockchain technology that operates independently of traditional financial institutions such as banks and governments. In a DeFi system, financial transactions and services are executed through decentralized applications (dApps) that run on blockchain networks.

DeFi provides an alternative to the traditional centralized financial system, where banks and other financial intermediaries control access to financial services and transactions. Instead, DeFi protocols enable peer-to-peer transactions and allow users to interact directly with one another in a trustless, transparent, and decentralized manner.

Some common DeFi services include lending and borrowing platforms, decentralized exchanges (DEXs), prediction markets, and yield farming platforms. These platforms use smart contracts, which are self-executing contracts with the terms of the agreement between buyer and seller being directly written into code, to facilitate transactions and automate processes.

Overall, DeFi represents a new paradigm for cryptocurrency and financial services, offering greater accessibility, transparency, and security to users around the world.