« Back to Glossary Index

Decentralized Finance (aka DeFi) is a part of the Web3 ecosystem used to describe blockchain technologies managing traditional financial transactions (lending/mortgages, investing, insurance, CDs, asset trading, etc). DeFi projects seek to democratize finance by replacing legacy financial institutions with peer-to-peer blockchain based relationships using smart contracts: “DeFi takes the key elements of the work done by banks, exchanges and insurers today—like lending, borrowing and trading—and puts it in the hands of regular people.” (R1)

By extending financial services ownership to the public domain, it creates a new way for the public to earn income: “Anyone can join a DeFi loan pool and lend money to others. The risk is greater than with a bond fund or certificate of deposit, but so are the potential returns.” (R2)

References:
3109 DeFi Page
R1: https://www.forbes.com/advisor/investing/defi-decentralized-finance/
R2: https://theconversation.com/what-is-decentralized-finance-an-expert-on-bitcoins-and-blockchains-explains-the-risks-and-rewards-of-defi-161479

« Back to Glossary Index