DeFi stands for Decentralized Finance, which refers to a set of financial services and applications built on blockchain technology. In traditional finance, most financial services are centralized and controlled by banks or other financial institutions. DeFi aims to decentralize these services by leveraging the capabilities of blockchain and smart contracts.

Key characteristics of DeFi include:

Decentralization: DeFi applications operate on decentralized networks, typically blockchain platforms like Ethereum. This means there is no central authority or intermediary controlling the system.
Open Source: DeFi projects are often open-source, allowing anyone to inspect, contribute to, or modify the code. This promotes transparency and collaboration within the community.
Smart Contracts: DeFi platforms use smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. Smart contracts automate various financial processes, reducing the need for intermediaries.
Permissionless Access: DeFi platforms are usually accessible to anyone with an internet connection, without requiring users to go through traditional financial institutions. This promotes financial inclusion.
Interoperability: Many DeFi projects are designed to be interoperable, meaning they can work together seamlessly. This allows users to leverage multiple services and platforms within the DeFi ecosystem.

Some common types of DeFi applications include decentralized exchanges (DEX), lending platforms, yield farming, decentralized stablecoins, and more. DeFi has gained significant attention in recent years for its potential to reshape the traditional financial landscape by providing more inclusive, transparent, and accessible financial services. However, it's important to note that the DeFi space is relatively new and comes with its own set of challenges and risks. Users should exercise caution and conduct thorough research before participating in DeFi projects.