DeFi

Decentralized Finance

DeFi represents the reinvention of traditional financial services using blockchain technology and smart contracts.

What is DeFi?

DeFi is:

Financial services without intermediaries
Built on public blockchains
Governed by code and community
Open and permissionless

Traditional Finance vs DeFi

| Traditional | DeFi | |-------------|------| | Banks control funds | You control funds | | Limited access | Open to all | | High fees | Low fees | | Slow settlements | Instant settlements | | Opaque operations | Transparent code |

Key DeFi Categories

Lending & Borrowing

Compound: Algorithmic interest rates
Aave: Flash loans and diverse assets
MakerDAO: Collateralized stablecoins

Decentralized Exchanges

Uniswap: Automated market maker
SushiSwap: Community-governed DEX
Curve: Stablecoin optimization

Derivatives

Synthetix: Synthetic assets
dYdX: Perpetual futures
Opyn: Options protocol

Insurance

Nexus Mutual: Mutual risk sharing
Cover Protocol: Claims assessment

The DeFi Stack

Settlement Layer: Ethereum, L2s
Asset Layer: Tokens, NFTs
Protocol Layer: Smart contracts
Application Layer: User interfaces
Aggregation Layer: Yield optimizers

Risks and Challenges

Smart contract risk: Code vulnerabilities
Market risk: Volatility and liquidations
Regulatory risk: Uncertain legal status
Scalability: Network congestion

The Future of Finance

DeFi is not just an alternative to traditional finance - it's an evolution that promises to be more efficient, accessible, and transparent.