How Do Smart Contracts Enable Decentralized Finance (DeFi)?
Smart contracts are the foundational building blocks of DeFi. They automate financial services like lending, borrowing, and trading without relying on central authorities.
By codifying financial agreements, they ensure transparent, permissionless, and non-custodial transactions. This removes intermediaries, lowers costs, and increases accessibility to financial services globally.
Glossar
Accessibility
Barrier ⎊ The concept of accessibility in crypto derivatives addresses the structural and procedural impediments preventing broad market participation.
Smart Contracts
Function ⎊ Smart contracts are self-executing agreements with the terms of the agreement directly written into lines of code, residing on a decentralized ledger.
Automated Market Maker
Architecture ⎊ Automated Market Makers (AMMs) represent a paradigm shift in decentralized exchange (DEX) design, moving away from traditional order book models to a constant function market mechanism.
Financial Services
Capital ⎊ Financial services, within the context of cryptocurrency, options trading, and financial derivatives, fundamentally involve the allocation and management of resources to facilitate these activities.
Decentralized Finance
Architecture ⎊ Decentralized Finance, or DeFi, fundamentally reimagines traditional financial infrastructure through blockchain technology, specifically leveraging smart contracts to automate and execute financial agreements without intermediaries.
Decentralized Autonomous Organizations
OrganizationalForm ⎊ Decentralized Autonomous Organizations represent organizational structures encoded in software, governed by rules enforced via smart contracts on a blockchain, where decision-making power is distributed among token holders.