DeFi stands for Decentralized Finance, a sector of blockchain that seeks to recreate traditional financial systems like lending, borrowing, and trading—without centralized intermediaries such as banks or brokerages. It relies on smart contracts that automatically enforce agreements without the need for trust between parties.
Most DeFi protocols are built on Ethereum and are open-source, meaning anyone can inspect the code and use the services. Popular DeFi platforms include Uniswap (for decentralized exchange), Aave (for lending/borrowing), and Compound (for interest-earning savings).
DeFi enables financial inclusion by allowing users anywhere in the world to access services with just a crypto wallet. However, it also comes with risks, such as smart contract bugs, impermanent loss, and market volatility, which require users to be cautious and informed.
