Definition ∞ A Decentralized Finance Protocol is a set of automated rules and smart contracts deployed on a blockchain, enabling financial services without traditional intermediaries. These protocols facilitate peer-to-peer lending, borrowing, trading, and other financial activities. They operate autonomously and permissionlessly, accessible to anyone with an internet connection.
Context ∞ Decentralized Finance protocols are a primary driver of innovation in the digital asset space, regularly featured in news for their rapid growth, novel financial products, and security incidents. They present both significant opportunities for financial inclusion and considerable risks, including smart contract vulnerabilities and regulatory uncertainty. The ongoing development and regulatory response to these protocols shape the future of digital economics.
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