DeFi

Short for decentralized finance, DeFi refers to a set of financial tools that operate independently of intermediaries like banks, exchanges, and brokerage firms. Decentralized finance aims to create a more open and accessible financial ecosystem by utilizing smart contracts on a blockchain, with Ethereum being the primary platform.

DeFi systems enable individuals to engage in activities like trading cryptocurrencies, lending, borrowing, and speculating on asset price fluctuations using derivatives. Participants may even obtain insurance coverage and earn interest through savings-style accounts.

The structure of DeFi involves multiple layers and modular components that can be easily combined. However, while promising high interest rates, certain DApps (decentralized applications) come with risks. Coding mistakes and security breaches are frequent occurrences in the DeFi space. Consequently, we urge users to exercise caution when participating in decentralized finance systems.

Bitcoin, Blockchain bridge, Component, Computer acronyms, Crypto terms, Currency, Open source