Decentralised Finance, or DeFi, refers to blockchain-based financial systems that operate without centralised intermediaries like banks or brokers. Instead, they use smart contracts on networks like Ethereum to facilitate peer-to-peer lending, borrowing, trading, and yield farming. DeFi platforms promote transparency, accessibility, and user control over assets. They offer 24/7 access to financial services globally, often with lower fees. However, DeFi also carries risks like smart contract bugs, market volatility, and regulatory uncertainty. Despite these challenges, DeFi is reshaping traditional finance by democratising access to financial tools and creating new models for value exchange and investment.
Example:
Automated financial agreements execute lending or settlement terms without manual intervention through centralized institutions.
