DeFi

DeFi conducts financial transactions on a blockchain without intermediaries such as banks or brokers. Lending, deposits and exchange are handled automatically by programs.

Smart contracts are the core: code that executes automatically once conditions are met, completing transactions without human approval or assessment. No account opening or credit check is involved.

Advertised yields are often high, but where the yield comes from must be checked. A structure paying returns from new participants' money rather than genuine revenue cannot last.

The risk lies in the technology itself. A flaw in the code can drain the funds entirely. Large hacks have occurred repeatedly, and with no intermediary there is no way to recover the money.

The absence of regulation and protection matters too. Deposit insurance does not apply, and there is nowhere to complain when something goes wrong. Understanding the structure with a small amount first is the minimum principle.