DeFi stands for decentralized finance, which is an emerging financial technology that uses blockchain technology to remove third parties and centralized institutions from financial transactions. DeFi is an umbrella term for peer-to-peer financial services on public blockchains, primarily Ethereum. With DeFi, you can do most of the things that banks support, such as earn interest, borrow, lend, buy insurance, trade derivatives, trade assets, and more, but it’s faster and doesn’t require paperwork or a third party. DeFi is designed to use cryptocurrency in its ecosystem, so Bitcoin isn't DeFi as much as it is a part of it. The components of DeFi are cryptocurrencies, blockchain technology, and software that allow people to transact financially with each other. DeFi is still in its infancy, subject to hacks and thefts because of sloppy programming and a lack of security testing before applications are launched. DeFi is defined as a competitive, contestable, composable, and non-custodial financial ecosystem built on technology that does not require a central organization to operate.
