Decentralized finance (or “DeFi”) gives people around the world greater access to financial services. Imagine being able to send money, earn interest, or get a loan without a bank account or even an email address. It only takes a few clicks to connect to innovative services and apps.
With a crypto wallet and an internet connection, you’re ready to explore the world of DeFi.
What is DeFi and how does it work?
The term “DeFi” refers to an ecosystem of financial applications and protocols that are built on decentralized blockchains. DeFi is centered around the idea that anyone should be able to access services and tools with real-world financial applications.
DeFi runs on a stack of core building blocks working seamlessly together:
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Blockchains: Digital networks that provide infrastructure to power DeFi apps, similar to operating systems (think Windows or Mac) that support all kinds of software.
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Smart contracts: Blockchain-native computer programs that can automate tasks and cannot be altered by a malicious party.
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Decentralized apps (or “dapps”): Smart contract-powered apps designed to run on blockchains like Ethereum, like how traditional software is built to be compatible with a specific operating system (e.g., PC, Android, and iOS).
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Onchain wallets: Apps or devices that let users self-custody their crypto and connect with DeFi apps (like Uniswap Wallet).
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Cryptocurrencies: Digital assets designed for use in blockchain transactions, such as bitcoin (BTC), ether (ETH), and stablecoins like USDC.
Though belonging to the “dapp” category, these applications behave like regular apps. Most can either be downloaded from a smartphone app store or are accessible on a web browser.
DeFi apps also let you execute and confirm transactions — not unlike sending a payment through PayPal or Venmo. But instead of a centralized bank or payment processor confirming it, the blockchain does.
What can you do with DeFi?
DeFi unlocks endless possibilities. Here are a few exciting ways you can get started today:
1. Swapping tokens
Decentralized exchanges (DEXs) like the Uniswap Protocol make it easy to trade digital assets directly. Imagine being able to trade your Apple stock for Berkshire Hathaway stock without cashing out first.
2. Providing liquidity (LPing)
Anyone with a crypto wallet can earn fees by depositing assets into liquidity pools, which are used in DEX transactions — kind of like stocking a vending machine and earning a cut every time someone grabs a snack. With only a few clicks, you can start providing liquidity in the Uniswap Protocol.
3. Borrowing digital assets
On decentralized borrowing protocols, users deposit assets as collateral to borrow other tokens. Unlike traditional borrowing — which often requires credit checks and approvals — decentralized borrowing is seamless. With a crypto wallet, users can connect, deposit, and borrow in just a few clicks.
4. Tokenizing real-world assets
Representing assets like real estate and artworks as digital tokens can make it easier to prove and transfer ownership. Tokenization even allows for “fractionalized” ownership: imagine one million different people with a verifiable ownership stake of a painting like the Mona Lisa!
5. Sending large sums of money
It’s often faster and cheaper to send large amounts of money over the blockchain, because DeFi transactions don’t go through banks, payment processors, or currency converters — cutting out delays and fees.
To see other use cases, websites like DappRadar can help you discover thousands of apps.
The benefits of DeFi
DeFi is built to support a truly open, global, 24/7 economy that anyone can access — making it an exciting alternative to traditional finance. Some of DeFi’s benefits include:
- Speed: Fast execution on transactions like token swaps
- Low cost: Fewer third-parties involved can reduce total costs
- Borderless: Global financial rails allowing wallets to interact seamlessly
- Peer-to-peer: Wallets connect to apps directly — no intermediaries
- Operational 24/7, 365: DeFi never closes for the night or weekend
- Secure: Encrypted blockchains enable secure, irreversible transactions
- Accessible: No bank account or credit score needed
A few decades ago, the world went online and it never looked back. Now, the world is discovering the benefits of getting onchain. Today, DeFi’s global user base includes individual users, professional traders, and some of the largest traditional financial institutions. In bullish market conditions, total value locked across DEXs has repeatedly crossed the $100 billion mark — a signal of DeFi’s global momentum and staying power.
A wallet that puts DeFi in your pocket
Your crypto wallet is your connection to DeFi. Uniswap Wallet is easy to use, secures your assets, and works seamlessly with one of the world’s most popular onchain marketplaces, the Uniswap Protocol.
Go direct to DeFi today by downloading Uniswap Wallet for iOS or Android.
