Decentralized finance (DeFi) is an umbrella term for the part of the crypto world that allows users to avoid intermediary parties and conduct financial transactions directly with other users. It is swiftly gaining acceptance as a viable substitute for conventional financial services.

Decentralized financial services are those offered by blockchains as opposed to “centralized” financial services offered by banks or other conventional financial organizations.

It allows people to use cryptocurrencies for lending, borrowing, earning interest, trading assets, and buying insurance, among other services. DeFi can essentially provide the crypto version of services that are usually provided by the traditional banks via government-issued fiat currencies.

DeFi transactions are typically quicker, more affordable, and simpler, with new benefits and services being constantly introduced.

Users can access their assets through secure digital wallets and enter into smart contracts to make transactions. This provides users with access to a wide range of financial services, ranging from peer-to-peer lending to trading via decentralized exchanges. DeFi is open to anyone with an internet connection, making finance far more accessible.

Currently, DeFi applications are built on the likes of the Ethereum blockchain, Cardano, Binance, and Solana. However, the segment is still in its infancy compared to centralized finance systems, paving the path to the creation of new applications everyday.