DeFi (Decentralized Finance) refers to financial services and applications built on blockchain technology, enabling:
- Open access
- Transparency
- Interoperability
- Security
- Censorship resistance
DeFi ecosystem includes:
Lending Platforms
- Aave
- Compound
- MakerDAO
Decentralized Exchanges (DEXs)
- Uniswap
- SushiSwap
- Curve
Stablecoins
- USDT (Tether)
- USDC (Coinbase)
- DAI (MakerDAO)
Prediction Markets
- Augur
- Gnosis
Insurance Protocols
- Nexus Mutual
- Uniswap Insurance
Yield Farming
- Liquidity mining
- Staking rewards
Key Characteristics
- Decentralized governance
- Smart contract-based
- Cryptocurrency-enabled
- Borderless transactions
- Transparency and security
Benefits
- Financial inclusion
- Increased efficiency
- Reduced costs
- Enhanced security
- Innovation and accessibility
Challenges
- Regulatory uncertainty
- Scalability issues
- Security risks
- Liquidity limitations
- User adoption
Real-World Applications
- Microfinance
- Cross-border payments
- Supply chain finance
- Digital identity verification
- Social impact initiatives
DeFi has transformed traditional finance by providing decentralized, trustless, and permissionless financial services.