DeFi, short for Decentralized Finance, refers to a financial ecosystem built on blockchain technology that aims to recreate and improve traditional financial systems without the need for centralized intermediaries like banks or brokers. DeFi applications allow users to lend, borrow, trade, and earn interest on their cryptocurrency assets through smart contracts on platforms like Ethereum.
Key features of DeFi include:
1. **Transparency**: Transactions are recorded on public blockchains, making them verifiable and transparent.
2. **Accessibility**: Anyone with internet access can participate, often without the need for extensive documentation or a bank account.
3. **Programmability**: Smart contracts automate financial transactions, reducing the need for human intervention and increasing efficiency.
4. **Interoperability**: DeFi applications can often interact with one another, allowing users to combine services and products seamlessly.
Popular DeFi applications include decentralized exchanges (DEXs), lending platforms, yield farming protocols, and stablecoins. However, it's essential to be aware of the risks involved, such as smart contract vulnerabilities and market volatility.#defi
