What Is Decentralized Finance (DeFi) and How Does It Work?

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What IsDecentralized Finance ? Decentralized Finance, or DeFi, refers to a system of financial applications and services built on decentralized blockchain networks, typically using smart contracts.

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Know How Decentralized Work

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Decentralized Infrastructure: DeFi applications are built on decentralized blockchain platforms, primarily Ethereum.

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Smart Contracts: DeFi applications utilize smart contracts, which are self-executing agreements written in code. These contracts automatically execute predefined actions when specific conditions are met.

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Peer-to-Peer Transactions: DeFi allows users to transact directly with one another without intermediaries.

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Lending and Borrowing: DeFi platforms enable users to lend their cryptocurrencies or digital assets and earn interest on their holdings. .

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Decentralized Exchanges (DEXs): DeFi introduced decentralized exchanges that allow users to trade cryptocurrencies directly with one another.

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Yield Farming and Staking: DeFi platforms offer opportunities for users to earn additional rewards by participating in yield farming and staking.

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Governance and Decision-making: Many DeFi protocols are governed by decentralized autonomous organizations (DAOs).

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