Decentralized Finance applications, or DeFi, are financial services built on blockchain technology without central intermediaries. These applications leverage smart contracts to automate agreements and transactions, offering services such as lending, borrowing, and trading directly between users. DeFi aims to replicate traditional financial systems with enhanced transparency, accessibility, and resistance to censorship. The protocols operate on public blockchains, allowing for open participation and programmable financial operations.
Context
Decentralized Finance applications represent a significant shift in the global financial landscape, challenging conventional banking structures. Their rapid expansion has led to both innovative financial products and considerable regulatory scrutiny concerning consumer protection and systemic risk. The security of smart contracts and the potential for market volatility remain critical concerns for participants and observers. Ongoing developments focus on improving user interfaces, reducing transaction costs, and integrating with traditional financial systems.
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