DeFi
DeFi (decentralized finance) is the ecosystem of financial applications built on blockchains, replacing traditional intermediaries with smart contracts for lending and trading.
In Depth
DeFi protocols replace banks and brokers with permissionless smart contracts that anyone can interact with. The ecosystem spans lending platforms (Aave, Compound), decentralized exchanges (Uniswap, Curve), staking protocols, and yield vaults. DeFi's power comes from composability — protocols can plug into each other like building blocks. But that composability also creates systemic risk. A bug in one protocol can cascade across every protocol that integrates with it. Flash loans let attackers borrow billions in a single transaction, amplifying exploit impact. This is why DeFi protocols need rigorous security: audits, invariant testing, and fuzzing are all part of a mature security posture. See our smart contract security guide for the full picture.
Frequently Asked Questions
What is DeFi?
DeFi stands for decentralized finance. It's the collection of financial applications running on blockchains that let users lend, borrow, and trade without relying on banks or brokers. Everything runs through smart contracts, which means the code IS the financial system.
Why does DeFi need security audits?
DeFi protocols hold billions in user funds and operate without a safety net — there's no bank to reverse a fraudulent transaction. Smart contract bugs can drain entire protocols in minutes. Composability means one protocol's vulnerability can affect dozens of others. Rigorous audits and invariant testing are the frontline defense against fund loss.