DeFi, short for decentralized finance, refers to a financial system built on public blockchains like Ethereum. Instead of using traditional banks or brokers, DeFi protocols operate through self-executing smart contracts. These protocols handle transactions, manage assets, and enforce terms automatically.

To explain what DeFi is in simple terms, it is open-source financial software built on blockchain that lets anyone participate without intermediaries. These decentralized tools offer services like lending, trading, and earning interest, all without centralized control.