DeFi (decentralised finance)

DeFi is the umbrella term for financial services built from smart contracts on public blockchains rather than run by banks or brokers. Common examples include decentralised exchanges such as Uniswap, lending markets such as Aave where users deposit assets to earn interest or borrow against collateral, stablecoins such as DAI, and derivatives protocols.

Anyone with a wallet can use DeFi without an account, and the rules and reserves are visible on-chain. Different protocols can be combined like building blocks.

The risks are significant: smart-contract bugs and hacks, oracle manipulation, liquidations when collateral prices fall, governance attacks, admin keys that can change contracts, and phishing sites that imitate popular apps. High advertised yields often reflect high risk or temporary token incentives.