DeFi (Decentralized Finance) recreates financial services using smart contracts instead of banks.
DEXs (Decentralized Exchanges)
Trade tokens without intermediaries
Examples: Uniswap, SushiSwap, Curve
Lending/Borrowing
Lend assets to earn interest, or borrow against collateral
Examples: Aave, Compound, Maker
Yield Aggregators
Automatically optimize yield strategies
Examples: Yearn, Beefy, Convex
Liquid Staking
Stake while maintaining liquidity
Examples: Lido, Rocket Pool, Frax
TVL (Total Value Locked): Assets deposited in protocol
APY vs APR: APY includes compounding
Impermanent Loss: Risk when providing liquidity
Collateralization Ratio: How much collateral backs a loan
Smart Contract Risk: Bugs can drain funds
Oracle Risk: Price feeds can be manipulated
Liquidation Risk: Collateral sold if price drops
Rug Pull Risk: Malicious projects
Regulatory Risk: Rules still developing
- Start small
- Use audited protocols
- Understand what you're depositing
- Check TVL and age of protocol
- Don't chase highest APY (usually risky)
- Revoke unused approvals
1. Start with simple swaps on Uniswap
2. Try lending small amount on Aave
3. Gradually explore as you learn