Legacy financial systems around the world are highly centralized and controlled by a few government-approved mega-corporations. If you want to use any of the services that this centralized finance (CeFi) system offers such as banking, card payments, and loans, you have to hand over your money to these centralized institutions and let them hold and manage your money for you.
Decentralized finance (DeFi) is a modern, cryptocurrency-based, decentralized alternative to these legacy financial systems. It offers many bank-like services such as payments, lending and borrowing, and cryptocurrency exchange. However, instead of relying on centralized institutions, DeFi offers these services via self-governing systems on a decentralized network. Whenever you use DeFi, you hold and manage your own funds and choose the DeFi services you want to interact with.
After you've set up your crypto wallet and got some Ether, you can start exploring the many DApps and DeFi services that are available on Ethereum. Sending and receiving funds, buying and selling products and services, donating to your favorite creators, borrowing, and lending are some of the many activities that are possible with DeFi.
For this introductory guide, we'll be focusing on three areas of DeFi:
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