Decentralized Finance (DeFi)

DeFi refers to a system where financial products are built on blockchain technology, creating a decentralized alternative to traditional financial systems. In DeFi, there are no intermediaries like banks or brokers; instead, transactions are directly between users on the blockchain. This enables users to access financial services such as lending, borrowing, trading, and earning interest without the need for a central authority.

Smart contracts play a key role in DeFi, as they automatically execute transactions when certain conditions are met. This allows for trustless and transparent interactions between users. DeFi applications are typically open-source, meaning anyone can inspect the code and contribute to the development of the platform.

One of the main advantages of DeFi is that it provides financial services to those who may not have access to traditional banking systems. Additionally, DeFi platforms often offer lower fees and faster transaction processing times compared to traditional financial institutions. However, due to the decentralized nature of DeFi, users must be vigilant in understanding the risks associated with using these platforms.

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