Decentralized Finance: Automation of Financial Markets

The term decentralized finance - often abbreviated as DeFi - refers to solutions built using internet protocols, using decentralized software solutions, including public blockchains, and web interfaces. DeFi systems deploy 'digital vending machines' created by smart contracts to create automated solutions, resembling those of legacy financial services, without the need of human intervention - in form of middlemen - or a corporate structure. The original concept of a smart contract was developed by Nick Szabo in 1997; he used the example of a vending machine to describe the idea of a "embedded" contract with, in such a way as to make a breach of contract an expensive contract.