DeFi Explained: A Beginner’s Guide to Decentralized Finance

Decentralized Finance (DeFi) allows users to trade, lend, and borrow cryptocurrencies without traditional banks. Platforms like Uniswap and Aave enable users to interact directly with smart contracts, bypassing the need for intermediaries. This guide will help beginners understand the risks and rewards of DeFi.

One of the core benefits of DeFi is accessibility. Users from anywhere in the world can participate in financial activities without relying on a bank account. Yield farming and liquidity mining have emerged as popular ways to earn passive income by providing liquidity to DeFi platforms.

However, DeFi is still in its early stages and presents risks such as smart contract vulnerabilities, impermanent loss, and market volatility. Understanding these risks and using tools like hardware wallets and insurance protocols can help users navigate the DeFi ecosystem safely.