DeFi stands for decentralized finance, an umbrella term for financial services built on blockchain technology that operate without traditional intermediaries like banks or brokers. It enables peer-to-peer transactions—such as lending, borrowing, trading, and earning interest—using smart contracts on public blockchains like Ethereum. By eliminating centralized control, DeFi offers open, permissionless access to financial tools for anyone with an internet connection, promoting transparency, global reach, and user control over assets. However, it also carries significant risks, including smart contract vulnerabilities, lack of regulatory protection, and the permanent loss of funds if private keys are lost.
