What is Decentralized Finance (DeFi) – 101 Basics

DeFi is the abbreviation for Decentralized Finance. It is a collective term used to describe a wide variety of financial applications in cryptocurrency and blockchain technology. It enables decentralised applications for financial services.

DeFi could be described as a financial platform traditionally built on Ethereum Blockchain. This helps to facilitate financial transactions of smart contracts, protocols, and decentralized applications. It allows crypto entrepreneurs to recreate traditional financial services in a decentralized architecture, outside of companies’ and governments’ control. 

How is DeFi used?

DeFi has become more popular in certain financial areas than in others. For example, the borrowing and lending sector has become the biggest adopter. This provides the ability for investors to deposit their digital assets and earn interest from borrowers.

Unlike the traditional mainstream bank loan, the loan becomes cheaper because there is no middleman taking their cut. Under DeFi, the two parties (lender and borrower) are connected only by smart contracts. The lenders earn higher returns whilst the borrowers pay less interest on assets borrowed, supported through a transparent, decentralized platform. 

What DeFi solutions are available?

A number of DeFi applications have recently emerged based on specific protocols to facilitate the decentralization of financial services. These applications such as Compound, Dai, and Dharma, have cut special niches in the market through unique services to their respective users. For example, Dai is a Bitcoin-like digital token striving to become a global currency without any element of control from a centralised institution. 

In addition, the value of Dai is linked to the USD which significantly reduces the volatility that has limited Bitcoin’s practical usability in the trade industry. Another DeFi application, Dharma, allows users to issue and underwrite debts in exchange for investment returns. 

Many companies are using DeFi Applications today, including Cashcall, Elite Acceptance Corp, AFC Acceptance, CIG Financial, First Access, and Global Lending Services amongst others.

What DeFi tokens are available?

Below are some examples of the tokens available. This is not an exhaustive list, nor do we recommend these specific coins/tokens to purchase. Always Do Your Own Research (DYOR) before investing. There are many resources available online to conduct your research. View the full list and further details of DeFi tokens via the CoinGecko listing page.



DeFi has emerged as the new tasty morsel for the Blockchain and Crypto industry. The overriding goal of these applications is to reconstruct and revolutionize the global banking system, away from the central authorities who control it. Some believe that this is a great benefit. It could bring more transparency and resilience against global financial crises.