DeFi, a portmanteau of “Decentralized Finance”, refers to the creation of an ecosystem of financial tools that are built in on a blockchain.
DeFi is a form of a peer-to-peer finance that is experimental, with it running usually on Ethereum. Inexperienced investors are usually the ones at risk in this. It is promoted as offering costly interest rates with a number of providers that offer interest rates of triple digits.
Trades within the context of DeFi work through the mediation of smart contract programs. The smart contract programs for protocols within DeFi are run through open source software by a network of developers and programmers.