Definition ∞ A Decentralized Banking System operates without a central authority, relying instead on distributed ledger technology and smart contracts. It enables financial services like lending, borrowing, and trading directly between participants. This system aims to provide greater transparency, accessibility, and censorship resistance compared to traditional financial institutions. It represents a fundamental shift in financial service delivery.
Context ∞ The concept of a Decentralized Banking System is a core aspiration of the decentralized finance movement, challenging conventional financial structures. Key discussions revolve around scalability, regulatory clarity, and the mitigation of smart contract risks. Continued innovation in protocol design and user interfaces is crucial for wider adoption and for competing with established financial services.
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