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DeFi
(Decentralized Finance)
DeFi (Decentralized Finance) refers to blockchain-based financial services (lending, trading) without intermediaries, primarily on ETH and compatible chains. Uses smart contracts for protocols like Uniswap (DEX) and Aave (lending).
Total Value Locked (TVL) peaked at $180B in 2021 before crashing in the "Crypto Winter." Advantages over CeFi include 24/7 access, transparency, and yield farming opportunities (some APYs exceeded 1000%). Risks include smart contract bugs ($3B hacked in 2022) and regulatory uncertainty—the SEC targets DeFi projects like LBRY. Stablecoins (e.g., DAI) and NFT collateral are expanding DeFi's utility beyond speculative trading.
Total Value Locked (TVL) peaked at $180B in 2021 before crashing in the "Crypto Winter." Advantages over CeFi include 24/7 access, transparency, and yield farming opportunities (some APYs exceeded 1000%). Risks include smart contract bugs ($3B hacked in 2022) and regulatory uncertainty—the SEC targets DeFi projects like LBRY. Stablecoins (e.g., DAI) and NFT collateral are expanding DeFi's utility beyond speculative trading.