FoundationsBeginner4 min
What is DeFi, really?
Core question
What do I need to know before talking about yield and risk?
DeFi (Decentralized Finance) uses programs on a blockchain instead of a bank to enable saving, lending, and trading. You need a few core concepts for that — every asset you move in the process is a token.
The building blocks
DeFi
Short for “Decentralized Finance” — financial services like saving, lending, or trading that run directly on blockchain software, without a bank or other central intermediary.
Blockchain
A public, decentralized database where transactions and balances are recorded transparently for everyone — without a central authority controlling it.
Wallet
A digital wallet for managing your own crypto assets and interacting with DeFi protocols. SKN3X.COM itself does not connect to a wallet or execute any transactions.
Smart Contract
Self-executing code on a blockchain that automatically carries out financial logic, e.g. interest payments — without anyone having to manually enforce the rules.
Protocol
The application or smart contract system that operates this pool (e.g. Aave, Uniswap).
Liquidity Pool
A smart contract where users deposit assets so others can trade with them or borrow them — this is where the yield shown here comes from.
How it all fits together
From the foundation to your own wallet — in three steps.
Blockchain
A public, decentralized database where transactions and balances are recorded transparently for everyone — without a central authority controlling it.
Smart Contract
Self-executing code on a blockchain that automatically carries out financial logic, e.g. interest payments — without anyone having to manually enforce the rules.
Non-Custodial
Users retain control of their own assets, e.g. via their own wallet, instead of entrusting them to a bank or exchange — with correspondingly more personal responsibility.
Traditional
A bank or exchange holds your money and controls access to it.
DeFi
You hold your own assets — through your own wallet, with no middleman.
What you know now
You now know DeFi's core building blocks. The next lesson covers APY — the number you'll see first in the Finder, Navigator and Explorer.