Decentralised Finance (DeFi) is a financial system built on blockchain technology that allows for the creation of decentralised, peer-to-peer financial applications. These applications, also known as “smart contracts,” are self-executing and self-enforcing, meaning they can be programmed to automatically perform certain actions when certain conditions are met.
DeFi applications are built on top of blockchain networks such as Ethereum and are designed to provide a wide range of financial services, such as lending, borrowing, and trading, without the need for intermediaries like banks or financial institutions.
DeFi has the potential to democratise access to financial services, reduce the cost and complexity of financial transactions, and increase transparency and security. Some of the most popular DeFi applications include decentralized exchanges (DEXs), which allow users to trade cryptocurrencies without the need for a centralized exchange, lending platforms that allow users to borrow and lend assets using smart contracts, and yield farming platforms that allow users to earn interest on their assets by providing liquidity to other DeFi applications.
DeFi is a rapidly growing ecosystem, with the total value locked in DeFi protocols reaching Billions of dollars in 2021. However, it’s important to note that DeFi is still a relatively new and rapidly evolving field, and it carries a high level of risk and volatility, so it’s important to understand the risks and do your own research before investing.