What is Decentralization?
Financial services are typically facilitated by institutions such as Banks, Exchanges, and Brokerages. In DeFi, instead of large institutions, open-source programs called smart contracts that execute on blockchain networks enable these financial services.
This elimination of intermediaries that allows people and businesses to conduct financial transactions through code is decentralization.
DeFi was coined in 2018 by a group of entrepreneurs and Ethereum developers who wanted to free finance applications from traditional systems. The abbreviation sounds like defy, which is intentional.