DeFi
Short for “Decentralized Finance,” it refers to financial applications built on blockchain networks that operate without traditional intermediaries.
✦ Key Insight
DeFi platforms use smart contracts to replicate financial services like lending, borrowing, trading, and yield farming in a decentralized manner. Users retain control of their funds, and transactions are transparent and accessible globally. DeFi has grown rapidly because it removes the need for bank
✕ Common Misconceptions
It is often mistaken for similar sounding terms, but the technical implementation is distinct.
Detailed Explanation
In Practice
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Staking
The process of actively participating in transaction validation on a Proof-of-Stake (PoS) blockchain. Participants lock up (or 'stake') their cryptocurrency holdings to support network security and operations, earning rewards in return, similar to earning interest.
Smart Contract
A self-executing contract with the terms of the agreement directly written into code on a blockchain.
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