defi

Decentralized finance (often stylized as DeFi) provides financial instruments and services through smart contracts on a programmable, permissionless blockchain. This approach reduces the need for intermediaries such as brokerages, exchanges, or banks. DeFi platforms enable users to lend or borrow funds, speculate on asset price movements using derivatives, trade cryptocurrencies, insure against risks, and earn interest in savings-like accounts. The DeFi ecosystem is built on a layered architecture and highly composable building blocks. While some applications offer high interest rates, they carry high risks. Coding errors and hacks are a common challenge in DeFi. DeFi protocols exhibit varying degrees of decentralization, with truly decentralized protocols potentially acting as neutral infrastructure, while false decentralization leaves protocols open to manipulation and fraud or to being regulated as financial intermediaries.
A core principle of DeFi is its accessibility. By operating on public blockchains, DeFi applications (commonly referred to as "dApps") enable users from across the globe to access financial services without the need for a centralized authority or compliance with traditional Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
DeFi also introduces programmability and composability to finance. Developers can create interoperable financial products by combining different DeFi protocols like building blocks, a concept often referred to as "money Legos".

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