What is DeFi?

DeFi is a financial service with no central authority. DeFi applications aim to recreate traditional financial systems like banks and exchanges with cryptocurrency. Most DeFi runs on the Ethereum blockchain.
Users can lend out cryptocurrency like a traditional bank does with fiat currency and earn interest as a lender, all via DeFi lending. Borrowing and lending are among the most common use cases for DeFi applications. However, there are increasingly more and complex use cases, for instance, becoming a liquidity provider to a decentralized exchange.
Interest rates are typically more attractive in DeFi than in traditional banks. For example, users can earn up to 130% APY as interest on the SappChat platform. They also can borrow an instant loan by pledging their cryptocurrency assets as collateral.
The entry barriers to borrowing in DeFi are relatively lower than that of the traditional systems. In most cases, the only requirement to take out a DeFi loan is the capability to provide collateral with other crypto assets. For example, users can sometimes offer their NFTs (nonfungible tokens) as collaterals, depending on the DeFi protocol used.