DeFi stands for decentralized finance. It is a group of blockchain-based tools that try to recreate lending, borrowing, trading, and payments without traditional intermediaries.
How DeFi works
Most DeFi apps use smart contracts on blockchains like Ethereum. These contracts automatically execute financial rules when conditions are met.
Common DeFi uses
- Swap tokens through decentralized exchanges
- Lend assets and earn yield
- Borrow against on-chain collateral
- Use stablecoins for payments and liquidity
DeFi risks
Smart contract bugs, exploits, liquidity shocks, and high volatility can all affect DeFi users. Risk management is critical.
CryptoArenas covers the major assets that power DeFi and helps readers monitor their price, volume, and market momentum.