Definition ∞ Decentralized banking represents a financial system operating without a central authority, typically powered by blockchain technology and smart contracts. It offers services like lending, borrowing, and asset exchange directly between users, removing intermediaries such as traditional banks. This model promotes financial inclusion and censorship resistance through peer-to-peer interactions. It stands as an alternative to conventional banking, emphasizing user control and transparency.
Context ∞ The expansion of decentralized banking platforms continues to generate considerable discussion regarding their regulatory status and potential impact on global financial stability. Debates address the risks associated with smart contract vulnerabilities and the absence of traditional consumer protections. Future developments will likely involve improved protocol security, enhanced user interfaces, and efforts to reconcile decentralized operations with existing financial regulations.
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