What is DeFi?
Discover decentralized finance—a revolutionary financial system without banks, borders, or barriers
What You'll Learn
Banking Without Banks
DeFi stands for Decentralized Finance—a complete financial system built on blockchain technology that operates without traditional intermediaries like banks, brokers, or exchanges. Instead of trusting institutions, you trust code.
Imagine walking into a bank that's open 24/7, has no employees, no paperwork, no discrimination, and no geographic restrictions. You can borrow, lend, trade, and earn interest—all controlled by transparent smart contracts that treat everyone exactly the same. That's DeFi.
The Global Financial System
DeFi is accessible to anyone with internet—no credit checks, no minimum balance, no nationality requirements. A farmer in Kenya has the same access as a banker in New York.
The DeFi Revolution
Traditional finance is built on trust in institutions. You trust banks to hold your money, trust brokers to execute trades, trust clearinghouses to settle transactions. But what if we could replace trust with transparency? Replace permission with code? Replace middlemen with mathematics?
That's exactly what DeFi does. Every transaction is visible on the blockchain. Every smart contract's code is public. Every protocol's reserves are verifiable. You don't need to trust—you can verify.
Traditional Finance vs DeFi
🏦 Traditional Finance
- Business hours only (9-5 weekdays)
- Extensive paperwork & KYC required
- Settlement takes days
- Geographic restrictions
- High minimum balances
- Opaque operations
- Centralized control
- Can freeze your funds
🚀 Decentralized Finance
- 24/7/365 always open
- Pseudonymous - no personal info
- Instant settlement
- Global access
- Any amount (even $1)
- Fully transparent
- Community governed
- You control your funds
Core Principles of DeFi
Total Value Locked (TVL)
TVL measures the total amount of money deposited in DeFi protocols. It's the main metric for DeFi's growth.
Growth Perspective
DeFi TVL grew from $1 billion in June 2020 to over $180 billion at its peak. Even after market corrections, billions remain locked, proving DeFi's staying power.
What Can You Do in DeFi?
Major DeFi Protocols
🦄 Uniswap: The largest DEX, pioneered automated market makers (AMMs). Trade any ERC-20 token.
👻 Aave: Leading lending protocol. Deposit to earn interest or borrow against collateral.
⚫ MakerDAO: Creates DAI stablecoin. Lock ETH, mint DAI, maintain DeFi's decentralized dollar.
🔷 Compound: Algorithmic money markets. Supply assets to earn, borrow against them instantly.
🌀 Curve: Optimized for stablecoin swaps. Minimal slippage for large trades.
Check Your Understanding
Explore the DeFi Ecosystem
- Visit DeFiLlama.com and explore the current TVL rankings
- Click on "Chains" to see TVL breakdown by blockchain
- Find the top 5 protocols by TVL and note what they do
- Check the "Yields" page to see current DeFi interest rates
- Compare the best stablecoin yields across different protocols
- Visit Uniswap.org and connect your testnet wallet
- Explore the swap interface (but don't swap yet!)
- Visit Aave.com and view the lending markets
- Note the supply APY and borrow rates for major assets
- Research one DeFi hack and understand what went wrong