Glossary · D
DeFi (Decentralised Finance)
A category of financial applications built on public blockchains that replicate and extend traditional financial services — lending, borrowing, trading, earning interest — without banks, brokers, or any central authority. Smart contracts automate all functions.
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How DeFi works in practice
DeFi is financial infrastructure built as smart contracts on public blockchains: lending, trading, derivatives and asset management that run without a company in the middle. The properties that distinguish it are that anyone can use it and anyone can build on it.
Worked example
A lending market matches suppliers and borrowers algorithmically. No credit check, no account opening, no ability to refuse service — and equally no recourse, no deposit insurance and no support desk.
Figures are illustrative and chosen to be checkable, not live market data.
The mistake that costs people money
Disintermediation removes gatekeepers and the protections that came with them. There is no chargeback, no regulator to complain to in most cases, and no way to reverse a mistaken or malicious transaction.
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DeFi: common questions
- What is DeFi?
- A category of financial applications built on public blockchains that replicate and extend traditional financial services — lending, borrowing, trading, earning interest — without banks, brokers, or any central authority. Smart contracts automate all functions.
- How does DeFi work in practice?
- DeFi is financial infrastructure built as smart contracts on public blockchains: lending, trading, derivatives and asset management that run without a company in the middle. The properties that distinguish it are that anyone can use it and anyone can build on it.
- Can you give an example of DeFi?
- A lending market matches suppliers and borrowers algorithmically. No credit check, no account opening, no ability to refuse service — and equally no recourse, no deposit insurance and no support desk.
- What do people get wrong about DeFi?
- Disintermediation removes gatekeepers and the protections that came with them. There is no chargeback, no regulator to complain to in most cases, and no way to reverse a mistaken or malicious transaction.
- Where can I learn more about DeFi?
- Our full guide, What is DeFi? Complete Guide, covers DeFi in depth with worked scenarios and the risks involved. This glossary entry is the short definition.