DeFi, short for Decentralized Finance, encompasses a variety of financial services and applications that operate on blockchain technology, particularly on platforms like Ethereum. DeFi aims to recreate and improve upon traditional financial systems—such as lending, borrowing, trading, and insurance—by eliminating intermediaries like banks and brokers. Instead, these services are provided through decentralized protocols and smart contracts, which automatically execute transactions and enforce terms based on predefined conditions. This approach offers several advantages, including increased transparency, reduced costs, and enhanced accessibility, as anyone with an internet connection can participate. DeFi applications are open-source, allowing for innovation and interoperability within the ecosystem, which has led to the rapid growth and diversification of financial products available on decentralized networks.
