What is DeFi? Finance without a middleman
By SendPay Business · · 2 min read
DeFi, short for decentralised finance, is a set of financial services such as trading, lending and borrowing that run on public blockchains through smart contracts, instead of through a bank or a company's systems.
How it works
People connect a self-custody wallet to a DeFi app and interact directly with smart contracts. A decentralised exchange, for example, lets users swap one token for another from a shared pool of funds, with prices set by code rather than an order book run by a company.
DeFi vs centralised services
- Centralised (CeFi): a company holds your funds, checks your identity and handles support.
- DeFi: you keep control of your wallet and deal with code; there's usually no one to call if something goes wrong.
The risks
Bugs in smart contracts have led to large losses, prices can move very fast, and some projects are outright scams. Transactions generally can't be reversed, and in the UK crypto isn't covered by the Financial Services Compensation Scheme.
Where SendPay fits
SendPay doesn't offer DeFi services. SendPay crypto exchange platforms let your customers buy, sell and hold crypto under your own brand, with assets held with regulated partners, and you set your own trading fee.
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This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.