DeFi Protocol
Decentralized financial application on blockchain — lending, swap, staking without a bank.
A DeFi protocol is a decentralized financial application built on smart contracts that replicates — and often improves — traditional financial services.
Categories of DeFi protocols:
1. DEX (Decentralized Exchange) • Uniswap, Curve, Jupiter (Solana) • Token swaps without a central exchange
2. Lending/Borrowing • Aave, Compound, Venus • Deposit collateral, take loan
3. Yield Aggregator • Yearn Finance, Convex • Automatically finds and uses best yield
4. Derivatives • dYdX, GMX, Synthetix • Perpetuals, options, synthetic assets
5. Stablecoins • MakerDAO (DAI), Frax, Liquity
6. Liquid Staking • Lido (stETH), Rocket Pool (rETH)
Key metric: TVL (Total Value Locked) — total value of assets in protocol. Track on DefiLlama.com.
Risk: Smart contract exploit, oracle manipulation, economic attack (flash loan).