DeFi Layer

Definition ∞ The DeFi layer comprises the decentralized applications and protocols operating on a blockchain for financial services. This layer includes decentralized exchanges, lending platforms, stablecoin protocols, and yield-generating strategies, all built without traditional intermediaries. It leverages smart contracts to automate financial agreements and transactions, providing permissionless access to various financial instruments. The DeFi layer represents a significant shift towards open and programmable financial systems.
Context ∞ The DeFi layer continues to experience rapid expansion, with innovations constantly appearing in lending, trading, and asset management. Regulatory scrutiny remains a prominent discussion point, as jurisdictions worldwide consider how to supervise these novel financial products. Security concerns, particularly regarding smart contract exploits, are a continuous challenge for the ecosystem.