DeFi

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DeFi (decentralized finance) is a financial ecosystem built on blockchain technology that enables users to access financial services without relying on traditional banks or intermediaries. By utilizing smart contracts and decentralized applications (DApps), DeFi facilitates activities like lending, borrowing, trading, and earning interest on digital assets in a transparent and automated way. What is DeFi? It is an open, permissionless system where users maintain full control over their funds, eliminating the need for centralized authorities while improving accessibility and security. Popular DeFi platforms operate on blockchains like Ethereum, employing decentralized protocols to enable transactions between users.

A key advantage of DeFi is its ability to provide financial services to anyone with an internet connection, bypassing traditional barriers such as credit checks or banking infrastructure. What does DeFi mean in practical terms? It encompasses decentralized exchanges (DEXs), lending protocols, stablecoins, and yield farming, all of which operate without intermediaries. However, while DeFi offers greater financial freedom, it also presents risks such as smart contract vulnerabilities, regulatory uncertainty, and potential security breaches. Despite these challenges, DeFi continues to expand, reshaping the financial landscape by providing more inclusive and transparent alternatives to traditional finance.

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