Instead of a bank or broker, DeFi uses smart contracts that anyone can interact with. It can offer openness and transparency, but also carries smart-contract risk, volatility and little consumer protection.
Key takeaways
- DeFi, or decentralised finance, refers to financial services like lending and trading run on blockchains without traditional intermediaries.
- DeFi applications typically use smart contracts, so users interact directly with code rather than a bank or broker.
- DeFi can offer open access but carries serious risks, including software bugs, scams, and the loss of funds with little recourse.
DeFi — frequently asked questions
What does DeFi actually let me do?
It lets people lend, borrow, trade, and earn on crypto assets through applications that run on a blockchain instead of a bank.
Is DeFi safe to use?
It can be risky. Smart contracts may contain flaws, funds are often unrecoverable if something goes wrong, and there is usually no customer support.
This definition is educational and not financial advice. Crypto is volatile and high-risk — always do your own research.
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