Decentralized finance

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Decentralized finance (often stylized as DeFi) provides financial instruments and services through smart contracts on a programmable, permissionless blockchain. This approach reduces the need for intermediaries such as brokerages, exchanges, or banks.^[1] DeFi platforms enable users to lend or borrow funds, speculate on asset price movements using derivatives, trade cryptocurrencies, insure against risks, and earn interest in savings-like accounts.^[2] The DeFi ecosystem is built on a layered architecture and highly composable building blocks.^[3] While some applications offer high interest rates,^[2] they carry high risks.^[4] Coding errors and hacks are a common challenge in DeFi.^[5][2]