Definition ∞ DeFi engagement signifies active participation in decentralized finance protocols and applications. This includes actions such as lending, borrowing, staking, providing liquidity, and trading on decentralized exchanges. Users interact directly with smart contracts on a blockchain, removing traditional intermediaries. It represents a user’s interaction with the open and permissionless financial systems of Web3.
Context ∞ DeFi engagement is a key metric for assessing the vitality and adoption of decentralized financial ecosystems, frequently reported in crypto news. The discussion often addresses the associated risks, such as smart contract vulnerabilities and impermanent loss, alongside the potential for high returns. Future developments include improvements in user experience, enhanced security measures, and greater regulatory clarity, influencing the accessibility and mainstream acceptance of DeFi.
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