AdvancedCrypto1 min
DeFi (decentralized finance) means financial services (swaps, lending, savings) built on smart contracts in a blockchain, where no bank or exchange acts as an intermediary.
In plain words
You connect a wallet to a protocol and use it through a smart contract: swap tokens, lend them out or add them to a liquidity pool. The advantages are accessibility and open code. The risks: code errors and hacks, vanishing liquidity, volatility, gas fees, no customer protection and legal uncertainty. The high returns that protocols promise usually come with a high risk of losing funds.
Sources
- ethereum.org: Decentralized finance (DeFi) — DeFi page. Checked 14.10.2026.
Example. You swap USDT for ETH through a decentralised exchange: you sign the transaction in your wallet, pay gas and the tokens change hands with no registration on the website.