DeFi stands for Decentralized Finance.
It’s basically a term for traditional— and not-so-traditional— financial products and services re-imagined for a crypto-native world. It’s a critical piece of building a truly Open Web.
To start, anyone with Internet connection can participate in DeFi. There are no centralized authorities who can deny you access to anything (e.g. a loan, a bank account, access to your own funds).
| Features | Traditional Finance | DeFi |
|---|---|---|
| who holds your money? | your money is held by companies | you hold your money |
| who controls your money? | you have to trust others to not to mismanage | you control where your money goes |
| how long do payments take? | payments can take days | funds transfer in minutes |
| what about identity? | financial activity is tied to your identity | transaction activity is pseudonymous |
| how do you qualify? | you must apply to qualify | open to anyone |
| market hours of operation? | markets close because employees need breaks | markets are always open |
| who gets to look at the books? | financial institutions are closed books | anyone can inspect data and ledgers |
Source: Ethereum.org
DeFi has lots of use cases, including: