Decentralized finance is an umbrella term for a host of activities that cut the middleman out of traditional financial services like banking. It encompasses loans, interest-earning accounts, money transfers, insurance, and cryptocurrency exchanges. For example, I might lend you $100 worth of Bitcoin (BTC) via DeFi, and I’d then earn interest on that loan — without involving a traditional lender.
When Bitcoin first launched, one of the amazing things about it was its decentralized nature. Previously, digital money required the backing of a third party — whether a bank or government — to validate transactions and guarantee payments. The same blockchain technology that powers Bitcoin is what enables the decentralized finance industry to cut out intermediaries.
How regulators should consider the future of DeFi (FintechNews)