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What Is DeFi?

· 3 min read

Imagine being able to fully control your assets without relying on banks or government institutions. Achieving true financial freedom thanks to thousands of people building a decentralized financial system based solely on supply and demand. A system without intermediaries, where you can access any available financial tools and earn income without interacting with centralized platforms.

In short, DeFi — decentralized finance — is an area where anyone can freely use a wide range of financial instruments without involving centralized services. All interaction happens directly between participants, and security is ensured by smart contracts.

What Makes DeFi Possible?​

Smart contracts​

Smart contracts deployed on the blockchain execute actions automatically.
If information is written to the blockchain, it cannot be changed, deleted, or manipulated.
This is what makes DeFi systems reliable and censorship-resistant.

Decentralized Exchanges (DEXs)​

The most popular tool in DeFi is the decentralized exchange — a platform where you can swap cryptocurrencies without:

  • centralized exchanges,
  • KYC (identity verification),
  • providing personal information.

All you need is your wallet.

DEXs cannot be blocked or frozen. No one can restrict your access — the system exists independently of any company.

How Users Earn in DeFi​

Since DeFi has no intermediaries, the income that centralized exchanges usually keep for themselves can be earned by users.

1. Providing liquidity​

If you have, for example:

  • stablecoins, and
  • a small amount of ETH,

you can add them to a liquidity pool.
Every time someone swaps assets within that pool, you receive a portion of the fees.

This creates an actual passive income stream paid directly to users, not corporations.

2. Lending and borrowing​

You can lend your:

  • stablecoins,
  • ETH,
  • Bitcoin,
  • or other assets,

and earn interest.

Loans are secured by overcollateralization:
the borrower must deposit more collateral than they borrow.
This ensures your funds cannot be stolen or withdrawn by anyone.

3. Earning from bridges​

Blockchain bridges allow transferring assets between networks.
Users can provide liquidity to these bridges and earn fees on cross-chain transfers.

Today, nearly every DeFi tool — DEXs, lending markets, bridges — provides opportunities for earning.

This works only because there are no intermediaries.
Users interact directly and provide services to one another.

Skills Needed for Success in DeFi​

DeFi is powerful, but it's not a magic money machine.
Here’s what you need:

  • understanding liquidity,
  • knowledge of the tools,
  • risk management,
  • the ability to combine several protocols into a single strategy.

This is exactly what I teach in the DeFi module — step-by-step, from beginner tools to advanced methods.

In the Strategies module, I provide ready-made solutions that you can simply copy and start using from day one.

DeFi Is Not Without Risk​

There is no “support hotline.”
If you approve the wrong transaction or interact with a malicious smart contract — your funds can be lost permanently.

There are many ways to earn, but also many ways to lose.

Responsibility lies 100% on the user.

Why Experience Matters​

I entered the field in 2018 and have seen DeFi evolve from simple experiments to a global financial system.
New protocols appear constantly — and I study all of them.
Strategies form automatically because of years of experience and deep understanding.

My goal is to help you:

  • confidently use DeFi tools,
  • understand the mechanics,
  • build reliable, diversified income systems,
  • increase capital step by step,
  • grow your long-term investment portfolio.

What’s Next?​

In the next lesson, I’ll explain in detail the core tools of the DeFi ecosystem and how each of them can be used to generate income.

These materials are created for educational purposes only and do not constitute financial advice.