1What Is DeFi?
I've developed a new open source P2P e‐cash system called Bitcoin. It's completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust.
—Satoshi Nakamoto
Decentralized Finance (DeFi) is an alternative financial infrastructure that is open, permissionless, and interoperable, built on public blockchains such as Ethereum. DeFi consists of a wide variety of internet‐native applications and protocols that enable existing financial activities such as trading, investing, and payments, and also for entirely new financial capabilities. DeFi applications, being permissionless by design, are available for retail and institutional investors to utilize globally, with only an internet connection and sufficient know‐how being the prerequisites required to participate in DeFi. Like many emergent movements and technological trends, DeFi outpaces regulation and many aspects of DeFi are unregulated and suffer from a lack of standards necessary in financial applications. Nonetheless, DeFi represents an entirely new way to deliver financial services and could interface with traditional finance as well as financial technology (FinTech) in many ways.
Interfaces for DeFi take place through software tools and infrastructure already built for the existing cryptocurrency system, such as blockchains, managed infrastructure, web‐based browser wallets, centralized and decentralized exchanges, and the plethora of tools available ...
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