DeFi (or Decentralized Finance) is an alternative and adjacent form of financial services provided using cryptocurrencies such as Ethereum. DeFi aims to remove intermediaries such as banks and replace them with automatically executing contracts based on code and blockchain technology. Through this process, DeFi hopes to make financial services more fair and open to all who wish to participate.
Popular use cases for DeFi involve lending platforms, stablecoins, and decentralized exchanges. The majority of DeFi platforms are currently on the Ethereum network, although other blockchains such as Polkadot, Solana, and Binance Smart Chain have become DeFi hubs as well.
What are examples of DeFi protocols?
Aave, Maker, Compound and Uniswap are all famous examples of DeFi protocols. Aave and Compound are lending platforms, whereas Maker mints a stablecoin (DAI) and Uniswap is a decentralized exchange.
Is DeFi available on Bitcoin?
Yes, there are DeFi applications and use cases being built on top of Bitcoin, although at the time of writing they are not as abundant as those on Ethereum. Examples of DeFi implementations include Stacks and Sovryn.
Many Bitcoin advocates believe that in the future upgrades to Bitcoin and the Lightning network will enable more complex DeFi applications away from the base layer, thus optimizing for both complexity and safety.