DeFi
Decentralized Finance. Financial services and products built on blockchain technology that operate without traditional intermediaries like banks or brokerages.
Why It Matters
DeFi (Decentralized Finance) represents a shift from traditional financial systems to blockchain-based solutions. Understanding DeFi is crucial for anyone looking to explore innovative financial opportunities beyond conventional banking.
Example
For instance, lending platforms in DeFi allow users to lend their assets and earn interest without intermediaries. This opens new avenues for financial services without relying on banks.
Beginner Context
For newcomers, learning about DeFi is essential as it is one of the most exciting developments in the crypto space. It empowers users with greater control over their finances and promotes inclusivity.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
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Smart Contract
Self-executing code stored on a blockchain that automatically enforces the terms of an agreement when predetermined conditions are met.
AMM
Automated Market Maker. A decentralized exchange protocol that uses mathematical formulas to price assets, allowing users to trade without traditional order books.
Liquidity Pool
A collection of funds locked in a smart contract that provides liquidity for decentralized exchanges. Users who contribute to pools earn trading fees as rewards.
DApp
Decentralized Application. An application that runs on a blockchain or peer-to-peer network rather than on centralized servers.
TVL
Total Value Locked. The total amount of assets deposited in a DeFi protocol, used as a key metric to measure the protocol's adoption and health.