What is DeFi?

DeFi, short for "decentralized finance," is a new way of doing financial activities using blockchain technology, especially on Ethereum. With DeFi, you can do many things you’d normally do with a bank—like saving, borrowing, lending, trading, or buying insurance—but without going through a bank, filling out forms, or waiting days. Everything happens directly between people using apps built on the blockchain.

DeFi is open to anyone with an internet connection. It doesn’t matter where you live, and you don’t need to share personal details like your name or email. It’s global, fast, and works 24/7.

Why is DeFi Important?

DeFi takes the idea behind Bitcoin (digital money) and builds a full financial system around it—without the need for big banks, office buildings, or high fees. It makes financial tools more accessible, fair, and open to everyone.

How Does DeFi Work?

You use DeFi through special apps called "dapps" (short for decentralized apps), mostly built on Ethereum. There’s no paperwork or waiting for approval. Just connect your wallet and start using the service.

Common ways people use DeFi:

Lending: Let others use your crypto and earn interest, minute by minute.
Borrowing: Get a loan instantly, no forms needed.
Trading: Buy and sell crypto directly with others, without a broker.
Saving: Use crypto savings tools to earn more interest than regular banks.
Derivatives: Bet on future prices of assets, similar to stock options.

Things to Keep in Mind

Fees Can Vary: Ethereum fees go up when lots of people are using the network.
Prices Can Change Fast: DeFi is still new and prices can be volatile.
Self-Responsibility: You’re in charge of your own taxes and records.
Regulations Vary: Rules can be different depending on where you live.

At Movo, we encourage users to explore new technologies like DeFi with curiosity—but also caution. Always do your research and understand the risks before jumping in.

Lesson 4: What is DeFi?