What is DeFi?. DeFi is a set of financial services built on smart contracts—exchanges, lending, derivatives—operated by code rather than a company.
How it works
Users interact directly with contracts from their wallets. Incentives and fees sustain liquidity and development.
Why it matters
DeFi widens access to markets and composable products but requires careful risk management.
Common pitfalls
- Approving unknown contracts
- Chasing high yields without assessing risk
- Confusing governance tokens with claims on revenue
Quick example
You supply a stablecoin to a lending market and earn yield from borrowers, with collateral and rates enforced by contracts.
See also
- DEX
- Liquidity Pool
- TVL
TL;DR: What is DeFi? defined in plain English with practical next steps.
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