CoinucationDeFi
DeFi, or decentralized finance, is a set of financial services like trading, lending, and borrowing that run on smart contracts instead of banks.
Decentralized finance, or DeFi, recreates financial services using code on public blockchains. Instead of a bank or broker sitting in the middle, a smart contract holds the funds and enforces the rules. Anyone with a wallet and an internet connection can use these services without opening an account or passing a credit check.
The main building blocks are decentralized exchanges such as Uniswap, lending protocols such as Aave, stablecoins such as DAI, and staking services such as Lido. Because the contracts are open and composable, developers stack them together: a user might deposit ETH as collateral, borrow a stablecoin against it, and supply that stablecoin to a liquidity pool, all in a few transactions.
DeFi grew from almost nothing in 2019 to tens of billions of dollars in deposits by 2021, and total value locked has fluctuated with the market since. The risks are real: smart contract bugs, oracle manipulation, and poorly designed tokens have caused billions in losses. There is no customer support and no way to reverse a mistaken transaction.
What is DeFi? covers this in 8 minutes, with a quiz at the end.