Decentralized Finance - Defi vs Cefi: Gain An Understanding Between Decentralized Finance and Centralized Finance - Learn About The Potential Of Smart Contracts On Ethereum And Other Blockchains

Decentralized Finance (DeFi) refers to a blockchain-based financial system that operates without relying on intermediaries like banks or traditional financial institutions. Instead, transactions are automated through smart contracts, enabling secure and transparent interactions.

Smart contracts are programming codes that automatically execute predetermined actions when certain conditions are met. They run on blockchains like Ethereum, facilitating secure and transparent interactions between parties without the need for intermediaries.

On the other hand, centralized finance (CeFi) refers to traditional financial institutions that act as intermediaries in financial transactions. While CeFi has been dominant in the past, DeFi is gaining popularity due to the security, transparency, and efficiency it offers, driven by the potential of smart contracts across various blockchains.