Decentralized Finance, or DeFi, is the umbrella term for financial services—like borrowing, lending, and trading—built on a blockchain. Unlike traditional banks, DeFi operates 24/7 without human intermediaries.
- Liquidity Pools: In DeFi, you don’t trade against a “house.” You trade against a pool of tokens provided by other users.
- Yield Farming: This is the practice of moving your digital assets across different DeFi protocols to find the highest interest rates or rewards.
- Staking: This involves “locking up” your tokens to help secure a blockchain network. In exchange for your contribution, the network rewards you with additional tokens, similar to earning interest in a savings account.