DeFi recreates familiar financial services — lending, borrowing, exchanges, derivatives, and savings — as open, permissionless software running on public blockchains, primarily Ethereum. Smart contracts automate what banks and brokers traditionally handle, allowing anyone with a wallet to participate. This can lower barriers and increase transparency, but DeFi also carries risks including smart-contract bugs, volatile collateral, and limited consumer protections. It represents one of the most active areas of blockchain innovation.