Introduction to DeFi

What Is DeFi?

As you explore Web3, you will encounter many new terms. DeFi is one of the most important concepts to understand.

DeFi, short for decentralized finance, uses blockchains and smart contracts to provide financial services without relying solely on centralized intermediaries. These services can include exchanges, lending markets, asset custody tools, and other programmable financial applications.

Developers and communities can deploy and govern DeFi applications. Compared with traditional finance, DeFi is designed to be permissionless, transparent, and less dependent on intermediaries, but it introduces smart-contract, market, operational, and self-custody risks.