DeFi
Decentralized Finance
A financial service that runs automatically on a blockchain without going through banks or companies.
In Simple Terms
DeFi is a financial service that lets you lend, borrow, and trade crypto assets without going through intermediaries like banks or brokerages. Unlike traditional banking, pre-set programs automatically execute contracts and settlements. As long as you have an internet connection and some crypto assets, it works from anywhere in the world.
Behind the Name
"DeFi" is short for "Decentralized Finance": "Decentralized" refers to having no single controlling authority, and "Finance" refers to money-related services. Together, the name captures how programs handle transactions automatically, without a bank or other administrator in charge.
Take a Closer Look!
DeFi is a financial service that runs without a central managing authority, using blockchain technology.
Put simply, it's a system where programs handle everything that banks and brokerages used to manage — lending, borrowing, and trading.
In traditional banking, financial institutions keep records of transactions and charge fees to handle settlement and verification.
With DeFi, pre-set programs automatically execute transactions once certain conditions are met.
That means there's no need to wait for an administrator's approval or for business hours — as long as you have an internet connection, you can transact directly, 24 hours a day.
In practice, DeFi is used for things like exchanging crypto assets, lending and borrowing funds, and earning rewards by depositing crypto assets.
Rather than entrusting your personal information to a company for management and protection, it's a system where parties trust the program's code and deal directly with each other.