What is DeFi?

Decentralized finance (also known as DeFi) is an experimental form of finance that does not depend on central financial intermediaries, such as brokers, exchanges or banks, and instead uses smart contracts in blockchains, the most common being that of Ethereum. DeFi platforms allow people to offer or receive loan funds from each other, speculate on price movements in a range of assets using derivatives, trade in cryptocurrencies, insure against risks and earn interest on a savings account. Some DeFi applications promote high interest rates, with some providers offering three-digit rates, but subject to high risk. In October 2020, more than 11 billion dollars were deposited in various decentralized finance protocols, which represented a growth of more than ten times during the year 2020. In January 2021, approximately 20.5 billion dollars had already been invested in DeFi.

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