GlossaryIntermediate
DeFi
Blockchain-based financial applications that use smart contracts instead of relying entirely on traditional intermediaries.
DeFi is short for decentralised finance. It describes applications such as exchanges, lending markets, and asset-management systems built from blockchains and smart contracts.
Users typically interact through a wallet and are responsible for reviewing contracts, permissions, network fees, and risks. DeFi applications can fail through bugs, poor liquidity, oracle problems, or fraud.
Examples
- A decentralised exchange can let users trade against a liquidity pool.
- A lending protocol can use smart contracts to track supplied collateral and borrowed assets.