Decentralized finance (DeFi) is a blockchain-based form of finance that does not rely on central financial intermediaries such as banks, brokerages, or exchanges. Instead, DeFi applications and protocols are built on decentralized networks, such as Ethereum, and use smart contracts to automate financial transactions. Common DeFi applications include lending, borrowing, trading, and yield farming.
DeFi offers several key benefits over traditional finance: it is more accessible, transparent, and efficient. Anyone with an internet connection can access DeFi applications and services, regardless of their location or financial status. DeFi transactions are recorded on a public blockchain, making them transparent and auditable. And because DeFi applications are automated by smart contracts, they can operate 24/7 without the need for human intervention, which reduces costs and increases efficiency.
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