Encyclopedia Classification
Category: Decentralized Finance • Blockchain Applications • Financial Infrastructure
Discipline: Smart Contracts • Digital Asset Markets • Permissionless Finance
Prerequisites
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Article 220 — Crypto Portfolio Management: Asset Allocation, Diversification, Risk Models, Rebalancing, and Building Long-Term Wealth
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Article 216 — On-Chain Analysis Mastery
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Article 219 — Institutional Crypto Investing
Related Articles
Smart Contracts • Ethereum Ecosystem • Token Economics • Crypto Security • Blockchain Applications
Definition
Decentralized Finance (DeFi) is a financial system built on blockchain networks that allows users to access financial services without traditional intermediaries such as banks, brokers, or centralized institutions.
DeFi applications allow users to:
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Trade assets.
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Lend money.
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Borrow assets.
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Earn yield.
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Provide liquidity.
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Stake tokens.
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Create financial products.
The central idea:
DeFi attempts to recreate traditional financial services using programmable blockchain-based systems instead of centralized organizations.
Beginner Explanation
Traditional finance:
You deposit money at a bank.
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The bank lends money.
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The bank controls access.
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The bank earns interest.
DeFi:
You interact with a smart contract.
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The blockchain executes rules automatically.
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Users provide liquidity.
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Users earn rewards.
The difference:
Traditional finance uses institutions.
DeFi uses code.
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