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DeFi refers to financial services and products that are built on decentralized blockchain networks like Ethereum. The key difference from traditional finance is there are no central intermediaries like banks.
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Some common DeFi applications include:
Decentralized exchanges (DEXs) - Allow crypto trading without centralized exchanges. Uses automated smart contracts.
Stablecoins - Cryptocurrencies pegged to a reserve asset like the US dollar to minimize volatility.
Lending/Borrowing - Services for lending and borrowing crypto through decentralized apps. Uses overcollateralized loans.
Yield Farming - Earning interest and rewards for providing crypto liquidity to DeFi apps.
Payments - Services for fast, global crypto payments without banks. Uses public blockchains.
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Benefits of DeFi include more transparency, accessibility, efficiency and being open to anyone globally. Risks include smart contract bugs, volatility and lack of regulations.
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Overall, DeFi aims to create an open financial system using blockchain and crypto without centralized control. It's still an emerging space but growing rapidly.