What Is DeFi? Decentralised Finance in Plain English
DeFi rebuilds financial services — trading, lending, borrowing — as open software on a blockchain. Here is how it works and the risks involved.
Not financial advice. This article is for informational purposes only. Cryptocurrency is volatile and high-risk — do your own research.
DeFi, short for decentralised finance, is a catch-all term for financial services built as open software on public blockchains. Instead of a bank or broker in the middle, smart contracts hold the rules, and anyone with a wallet can use them — no account application, no gatekeeper.
What you can do
- Trade tokens on decentralised exchanges that match users directly through liquidity pools.
- Lend and borrow through protocols that let you earn interest on deposits or borrow against collateral.
- Earn yield by providing liquidity or staking, though returns come with real risks.
Why it matters
DeFi is open and composable: applications can plug into one another like building blocks, and the code is public for anyone to inspect. That transparency and permissionless access are its biggest strengths — you do not need anyone’s approval to participate.
The risks
Those same properties cut both ways. Smart-contract bugs can be exploited, and there is often no customer-support line or refund if something goes wrong. Prices can move fast, “yields” can be unsustainable, and some projects are outright scams. Self-custody also means you are responsible for your own keys and mistakes.
Explore the DeFi tokens we track on our DeFi hub. This is educational content, not financial advice — do your own research and never risk more than you can afford to lose.