DeFi

Technical

Decentralized finance — lending, trading, and yield protocols running on smart contracts instead of banks.

Definition

DeFi replaces custodians with code. Uniswap is a DEX, Aave is a money market, Lido stakes ETH, Pendle tokenizes yield — all permissionless, all composable, all running on smart contracts anyone can audit or fork.

The upside: open access, no KYC for most protocols, transparent rules. The downside: smart contract exploits, oracle manipulation, impermanent loss on LP positions, and no FDIC when a protocol drains. 'DeFi' and 'safe' are rarely in the same sentence — pick the protocols that have survived multiple cycles.

Examples

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Lending USDC on Aave for 4% is DeFi. Chasing 2000% APY on a fork is gambling.
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Protocol got exploited, $10M drained overnight. Smart contract risk is real.
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DeFi doesn't care about your country, your bank, or your credit score.

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