What is Decentralized Finance (DeFi)?
Cryptocurrency Exchange
One of the most notable innovations in the cryptocurrency ecosystem in recent years has been
Decentralized Finance, or DeFi for short. It is a financial model that offers services such as lending, investment, and payments traditionally provided by banks, intermediaries, or government institutions entirely on the
blockchain without any central authority.
DeFi enables users to conduct financial transactions while keeping their digital assets in their own wallets. This structure offers a significant alternative to centralized systems in terms of transparency, security, and accessibility.
What Is DeFi?
The question “What is DeFi?” can be answered as: “the provision of financial services on the blockchain without intermediaries.” Many blockchains, especially the
Ethereum network, provide the smart contract infrastructure needed for the development of DeFi projects. Through these smart contracts, users can borrow, lend, swap cryptocurrencies, or earn yields. While transaction approvals in traditional systems can take days, in DeFi this process is completed in seconds.
Centralized Finance vs. DeFi
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Feature
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Centralized Finance
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DeFi
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Control
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In the hands of banks and financial institutions
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In users’ own wallets
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|
Access
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Regional and limited
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Anyone with internet access can use it
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Transaction Time
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Hours or days
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Seconds
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Transparency
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Transactions in a closed system
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Transactions are public on blockchain
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Intermediaries
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Banks, payment providers
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Smart contracts
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These differences explain why DeFi has been rapidly adopted within the crypto community. In particular, hybrid models integrated with centralized exchanges allow users to benefit from both the freedom of DeFi and the liquidity advantages offered by exchanges.
How Does Decentralized Finance (DeFi) Work?
Unlike traditional financial systems, Decentralized Finance (DeFi) enables transactions and services to be conducted entirely online, without any intermediaries. DeFi protocols allow users to carry out financial transactions directly through their own digital wallets. For example, someone who wants to
trade cryptocurrencies can purchase crypto from a centralized exchange like CoinTR, then transfer these assets to DeFi applications running on Ethereum or other blockchains to perform token swaps or similar operations. In this system, transactions are not approved by centralized servers or banks; instead, automated programs called smart contracts, which run on the blockchain, take over. Smart contracts manage agreements and transactions between parties in a reliable, transparent, and intermediary-free manner.
In short, thanks to DeFi, it is possible to access financial services entirely in a digital and transparent environment without going to a bank or financial institution.
Advantages and Disadvantages of DeFi
DeFi offers many advantages compared to the traditional financial system:
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Advantage
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Description
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More Control
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Users have full control over their assets and are not dependent on central authority.
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Transparency
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All transactions are recorded on blockchain and can be audited by anyone.
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Accessibility
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Anyone with an internet connection can access financial services without geographical limitations.
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Fewer Intermediaries
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Transactions occur directly between users, reducing the costs of third parties.
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However, DeFi also has some disadvantages:
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Disadvantage
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Description
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Complexity of Use
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May require technical knowledge for new users.
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Price fluctuations of crypto assets can pose a risk.
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|
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Security Risks
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There may be bugs in smart contracts or malicious attacks.
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Lack of Regulation
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As it is not yet fully regulated, it may carry legal risks.
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Centralized exchanges like CoinTR can provide both easy access and a secure environment for their users while acting as a bridge in the transition to DeFi projects.
Use Cases of Decentralized Finance (DeFi)
DeFi is used in many different areas in the financial world and makes users’ lives easier. Here are the main use cases:
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Token Swaps: DeFi platforms allow users to exchange different cryptocurrencies quickly and without intermediaries. This enables investors to respond instantly to market opportunities.
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Liquidity Provision: Users can deposit their tokens into liquidity pools to earn passive income. This method increases the trading volume of the DeFi ecosystem and creates a more liquid market.
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Yield Farming: DeFi projects reward users for keeping their assets on the platform. This allows you to put your capital to work.
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Insurance Services: Some DeFi protocols enable users to insure their crypto assets against certain risks.
This flexible and innovative structure of DeFi also interacts with centralized exchanges. For example, tokens used during trading can be traded on exchanges and utilized within DeFi applications.
The Future of DeFi
Decentralized Finance (DeFi) continues to be one of the most dynamic and rapidly growing areas of the crypto ecosystem. As technology advances and more users seek financial freedom, the scope of DeFi projects is expanding. In the future, DeFi platforms are expected to become more accessible with user-friendly interfaces. This will allow even beginners in crypto to easily perform complex financial transactions. Additionally, the integration of centralized exchanges and DeFi protocols will increase, making hybrid finance models more common. Thus, users will be able to benefit from the advantages of both worlds. Clearer regulations will contribute to the maturity of the sector. A legal framework will both increase investor confidence and make it easier for new projects to enter the market. In summary, DeFi holds an important place in the future of finance, and platforms like CoinTR are active participants in this transformation, offering new opportunities to their users.
Top DeFi Coins and Tokens by Market Capitalization
Some tokens that stand out in the DeFi ecosystem attract attention both for their market capitalization and their use cases. Here are some large and popular
DeFi coins frequently traded by CoinTR users:
Uniswap (UNI)
Uniswap is one of the largest Ethereum-based decentralized exchanges (DEX). Users can swap tokens without intermediaries. The UNI token serves as the platform’s governance token, giving holders a say in decisions regarding the protocol.
Sushiswap (SUSHI)
Sushiswap operates similarly to Uniswap but offers additional features and incentive mechanisms. The SUSHI token is distributed as a reward to liquidity providers and is used in governance.
Near Protocol (NEAR)
Near is a scalable and fast blockchain network. It provides infrastructure for DeFi projects and is notable for its low transaction fees. The NEAR token is used for network security and transactions.
Cardano (ADA)
Cardano is a blockchain platform supported by academic research. It offers smart contract support for the development of DeFi applications. The
ADA coin is used for transactions on the network and for staking.
AAVE (AAVE)
Aave is a DeFi protocol known for its liquidity pools and interest-earning features. The AAVE token plays a role in protocol governance and offers various benefits to its users.
2025-08-12Legal Notice
The information, comments, and evaluations contained in this content do not constitute investment advice. This content is not intended to be prescriptive in any way and is intended to provide general information. It does not constitute investment advice. CoinTR cannot be held responsible for any transactions made based on this information or any losses that may arise.
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