Decentralized finance, or DeFi, is a blockchain-based financial system that operates without traditional intermediaries like banks. Using smart contracts on platforms like Ethereum, DeFi offers services such as lending, borrowing, and trading in a permissionless and transparent manner. This opens up financial opportunities to anyone with an internet connection, particularly the unbanked or underbanked populations.
The DeFi ecosystem has grown exponentially, with protocols like Uniswap, Aave, and Compound leading the charge. Users can earn interest on crypto deposits, take out loans without credit checks, or trade assets directly from their wallets. However, DeFi is not without risks, including smart contract vulnerabilities, regulatory scrutiny, and market volatility.
Despite these challenges, DeFi represents a paradigm shift in how financial services are delivered. As the technology matures and regulatory frameworks develop, DeFi has the potential to democratize access to financial tools and reshape the global economy.