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June 14, 2026
The Dispatch

Definition

DeFi

Decentralised Finance refers to financial services — lending, trading, yield — run by smart contracts on blockchains without traditional intermediaries. This is high-risk and informational, not advice.

DeFi recreates services like lending, borrowing, trading and earning yield using smart contracts instead of banks or brokers. Users interact directly from their own wallets, and protocols are often governed by token holders.

While it offers permissionless access and composability, DeFi carries serious risks: smart-contract bugs, hacks, scams, impermanent loss in liquidity pools, and extreme volatility. There is usually no recourse if something goes wrong, and no deposit protection.

In India, DeFi activity still involves VDAs subject to the 30% tax and 1% TDS, and the regulatory picture is evolving. This entry is informational only, not investment advice; treat DeFi as very high-risk.

Related terms

  • Crypto Wallet (Hot vs Cold)A crypto wallet stores the private keys that control your crypto assets; a hot wallet is internet-connected for convenience, while a cold wallet stays offline for security. This is informational.
  • Smart ContractA smart contract is self-executing code on a blockchain that automatically carries out agreed actions when conditions are met, without an intermediary. This is informational, not advice.
  • StakingStaking is locking up crypto in a proof-of-stake network to help validate transactions and, in return, earn rewards; it carries lock-up and slashing risks. This is informational, not advice.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.