DeFi (Decentralized Finance)

Decentralized Finance (DeFi) is a blockchain-based financial system that enables users to access traditional financial services, such as lending, borrowing, and trading, without intermediaries like banks. By using smart contracts on blockchain platforms like Ethereum, DeFi eliminates the need for centralized financial institutions, offering more transparency, security, and autonomy to users. DeFi platforms allow anyone with an internet connection and cryptocurrency to participate in global financial markets. However, they also carry risks, including smart contract vulnerabilities and market volatility, which can lead to losses.

Example

Aave is a decentralized lending platform where users can borrow and lend cryptocurrencies without needing to go through traditional banks.