---
description: >-
  By harnessing the power of blockchains and autonomous smart contracts Web3 is
  powered by decentralized finance.
---

# DeFi

Decentralized finance (DeFi) is the decentralized version of traditional finance. It uses blockchain technology to create a distributed ledger of all financial transactions. This allows for more transparency and security, as well as the ability to conduct transactions without the need for a central authority.

Defi was created in response to the shortcomings of the traditional financial system. The traditional system is centralized, meaning that it relies on a single authority to manage all financial transactions. This can lead to corruption and security breaches. Additionally, the traditional system can be slow and cumbersome, due to the need for intermediaries to facilitate transactions.

Web3 aims to solve these problems by decentralizing the financial system. By using blockchain technology, Web3 creates a distributed ledger of all financial transactions. This allows for more transparency and security, as well as the ability to conduct transactions without the need for a central authority.

