Decentralized Finance

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Decentralized Finance or DeFi, also known as Open Finance is a term used to describe software that mimics traditional trusted services such as lending, trading and derivatives but with open, transparent and trustless counterparts. DeFi protocols often employ specialized smart contracts in place of a traditional human, corporate or government third party.

DeFi protocols share many properties with open services.

Examples

  • Maker provides self-serve crypto-collateralized loans via a smart contract. It is the biggest DeFi protocol with nearly 350M USD (dollar converted ETH) backing active loans.
  • Bancor and UniSwap are exchange protocols that use automated market makers in place of order books.
  • Augur is a prediction market without moderators.
  • Dharma and Compound Finance are money-market protocols.
  • There are several projects working to build decentralized derivative products.

Further Information

  • defipulse.com provides a ranking of the top DeFi protocols.