Decentralized finance, or DeFi, refers to a financial system built on blockchain technology that operates without traditional banks or intermediaries. It allows users to lend, borrow, trade, and earn interest on their assets directly through smart contracts, which are self-executing agreements coded on the blockchain. DeFi platforms often use cryptocurrencies like Ethereum to facilitate transactions and provide services. This system aims to increase financial accessibility and transparency, enabling anyone with an internet connection to participate in financial activities, regardless of their location or background.