DeFi is the abbreviation of Decentralized Finance. It is an umbrella term for financial services on public blockchains. You can use DeFi to earn income, borrow money, lend money, buy insurance, trade derivatives and exchange assets among other things. The key advantage of DeFi is that it does not require any documentation or the involvement of a third party. This will save you some costs. You can also use DeFi without revealing your identity.
Using the term DeFi in a sentence
‘’DeFi is made possible by smart contracts’’. Smart contracts are programs running on the blockchain that can execute automatically when certain conditions are met. Smart contracts facilitate transactions without a third party.
‘’DeFi is one of the fastest growing areas on the blockchain and decentralized web space.’’
‘’DeFi uses cryptocurrencies and smart contracts to provide services that don’t need intermediaries.’’
History of the term ‘’DeFi’’
The term DeFi, short for decentralized finance, was born in an August 2018 Telegram chat between Ethereum developers and entrepreneurs including Inje Yeo of Set Protocol, Blake Henderson of 0x and Brendan Forster of Dharma. They were discussing how to call movemernt of open financial applications that were being built on Ethereum. Other options considered were Open Horizon, Lattice Network and Open Financial Protocols. Henderson said DeFi worked well, as it “comes out as DEFY”.