TECHNICAL CONCEPTS

DeFi (Decentralized Finance)

Definition

Decentralized Finance (DeFi) refers to a blockchain-based form of finance that recreates and improves traditional financial systems using smart contracts, removing intermediaries like banks and brokers. DeFi applications run on public blockchains and are accessible to anyone.

Example

💡 Example

You can lend USDC on Compound, borrow against ETH on Aave, and swap tokens on Uniswap - all without banks or brokers.

Risks to Consider

⚠️ Risks
  • Smart contract bugs
  • Regulatory changes
  • Market volatility

Common Questions

What are the main advantages of DeFi over traditional finance?

24/7 accessibility, permissionless access, transparency, programmability, and typically better yields for users.

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