Decentralized finance (DeFi) refers to a set of newly emerging financial products and services that operate on decentralized platforms using blockchains to record and share data. DeFi products and services are conducted without a trusted central intermediary such as a bank, and they include payments, lending and borrowing, trading and investments, capital raising (crowdfunding), and insurance.

DeFi is a natural historical progression of financial services offered on blockchains. Nakamoto (2008) showed the potential for payment services to be provided without the involvement of traditional financial intermediaries in the whitepaper that originated Bitcoin and its blockchain.

Since the creation of Bitcoin, a variety of projects have been undertaken to expand the set of financial services provided on blockchains with the potential of ultimately providing most, if not all, traditional financial services on blockchains. These services could be provided through firms that operate on blockchain(s) but otherwise look a lot like traditional financial intermediaries, an approach called centralized finance (CeFi) as opposed to DeFi.

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