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MENTAL MODEL · M1572

DeFi - Decentralized Finance

DeFi - Decentralized Finance
BusinessHigh supportFinance
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Version 1.0.0 · Updated 2026-07-28

CORE DEFINITION

Decentralized finance (commonly referred to as DeFi) is a blockchain-based form of finance that does not rely on financial instruments provided by institutions such as brokers, exchanges, or banks, but instead uses smart contracts on the blockchain (e.g., Ethereum) for financial activities. DeFi platforms allow people to lend or borrow funds from others, trade cryptocurrencies, and earn interest in savings-like accounts. As of October 2020, over $11 billion was deposited into various DeFi protocols. As of the end of June 2021, the DeFi market size was below $48 billion, a 45% decrease compared to May 2021 data. As of the end of August 2021, over $150 billion had been deposited into various DeFi protocols.

SCAFFOLDING EFFECT

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Reduce cognitive load

Decentralized finance (commonly referred to as DeFi) is a blockchain-based form of finance that does not rely on financial instruments provided by institutions such as brokers, exchanges, or banks, but instead uses smart contracts on the blockchain (e.g., Ethereum) for financial activities. DeFi platforms allow people to lend or borrow funds from others, trade cryptocurrencies, and earn interest in savings-like accounts. As of October 2020, over $11 billion was deposited into various DeFi protocols.

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Reconstruct traditional financial functions (lending, trading, derivatives) on public blockchains using smart contracts, removing intermediaries such as banks and brokers, relying on algorithms and over-collateralization to maintain solvency.

MINIMUM ACTION

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    zh.wikipedia.orghttps://zh.wikipedia.org/wiki/%E5%8E%BB%E4%B8%AD%E5%BF%83%E5%8C%96%E9%87%91%E8%9E%8DZH · Explicit
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English translation pending.

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