Decentralized Finance, often known as DeFi, is a general term for permissionless, peer2peer financial services and products, usually in the form of dapps (decentralized apps), and all housed on blockchain technology. You can see it as an alternative to financial products you would find at your bank or investment firms, but without the centralized authorities and management. In theory, DeFi can bring more choices and competition, low fees (especially in the form of Solana, Avalanche and other modern Layer 1 and Layer 2 blockchains), 24/7 access globally, and higher interest rates, as well as other opportunities for small and large investors to increase (or decrease) their funds.
Types of DeFi:
- Swap (swapping of tokens and NFTS)
- Liquidity Providing for AMM
- Staking (NFT or Token)
- Lending Protocols (Lending/Borrowing)