Digital assets
Decentralised finance
Also called DeFi
Financial services built from smart contracts rather than from institutions.
How it works
DeFi protocols offer lending, exchange and derivatives without an intermediary holding the assets. Rules are enforced by code and positions are usually over-collateralised.
There is no deposit insurance, no regulator to appeal to, and no mechanism to reverse an error.
Related terms
- Smart contractCode deployed on a blockchain that executes automatically when its conditions are met.
- Yield farmingMoving crypto between protocols to capture the highest available rewards.
- StablecoinA crypto token designed to hold a fixed value, usually one US dollar.
- Liquidity riskThe risk of not being able to sell when you want to, without accepting a bad price.
More in Digital assets
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.