DeFi — short for Decentralized Finance — enables permissionless financial services without banks or intermediaries. Users interact directly with smart contracts to earn, borrow, lend, and stake crypto assets autonomously.
How DeFi Works
Smart contracts automate financial agreements. Liquidity provided by users powers trading and lending activity. Users retain full custody of their assets — no bank needed.
DeFi Lending
Users deposit assets into lending pools to earn interest. Borrowers provide collateral and take crypto loans instantly through automated protocols.
Staking
Staking secures Proof-of-Stake blockchains. Users lock tokens to support network integrity in exchange for reward yields — similar to earning dividends.
- Rewards paid in the native cryptocurrency
- Lock-up periods vary across networks
- Lowers volatility by encouraging long-term holding
Yield Farming
Yield farming pushes returns further by incentivizing liquidity providers with additional tokens. High earnings come with risk — especially in volatile markets.
- Rewards from fees + governance tokens
- Requires active portfolio monitoring
- Smart contract risks must be considered
