Decentralized Finance (DeFi) refers to a blockchain-based financial ecosystem that operates without traditional intermediaries such as banks or financial institutions.
DeFi relies on blockchain technology to enable peer-to-peer transactions, smart contracts, and decentralized applications (DApps), ensuring transparency, security, and immutability.
The key components of DeFi include decentralized exchanges (DEXs), lending and borrowing platforms, liquidity pools, yield farming protocols, and synthetic assets.
DeFi aims to democratize access to financial services by providing open and permissionless access to anyone with an internet connection and a compatible wallet.
DeFi platforms allow users to lend their digital assets and earn interest or borrow assets by collateralizing their holdings, eliminating the need for traditional financial intermediaries.
DEXs facilitate peer-to-peer trading of digital assets without the need for a centralized authority, offering greater privacy, security, and control over assets.
Yield farming involves providing liquidity to DeFi protocols in exchange for rewards, such as interest, tokens, or governance rights, by staking or locking up assets in liquidity pools.