DeFi (decentralized finance) is about freedom. It is a new system where money works without banks and bureaucracy. Everything occurs through blockchain — reliably, quickly, and transparently. How does DeFi work? In DeFi, there are no intermediaries. Want to take out a loan or earn interest? No bank is needed! Everything is done through smart contracts — intelligent programs that fulfill conditions automatically.

DeFi (decentralized finance) is a world where your money works without banks and intermediaries. All operations are automated, thanks to blockchain and smart contracts. This technology is rapidly evolving: according to DeFi Pulse, by November 2024, over $90 billion in assets will be locked in DeFi platforms.

DeFi breaks stereotypes about how we manage finances. Forget about long lines at banks or complicated verification procedures — all of this is replaced by code and transparent processes.

Principles of DeFi

Example: imagine you have $1000 that you want to invest. Through a DeFi platform, you can lend it to other users at interest. The platform automatically checks the conditions via a smart contract, and you earn income.

Let’s break down how DeFi differs from conventional banking systems.

Example: if you get 1–2% annual interest on deposits in banks, through DeFi, you can earn up to 5–8% on stablecoins (digital dollars).

DeFi is not just a trend; it’s the future of finance. These systems operate on blockchain, providing an alternative to traditional banking services. The foundation is smart contracts — programs that automatically execute the terms of deals without intermediaries.

In practice:

DeFi began to develop in 2017 when the MakerDAO protocol was launched — the first project on the Ethereum blockchain.

Key milestones:

Today, millions of people use DeFi around the world. For instance, young people from developing countries prefer DeFi because it’s faster and simpler than traditional banks.

Example: DeFi in everyday life

Imagine: you want to send money to a friend in another country. Through a bank, it will take several days, and you will need to pay a fee. In DeFi, you do this instantly and pay a minimal fee, often less than $1.

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