DeFi (Decentralized Finance)
Financial services built on blockchain smart contracts that operate without traditional intermediaries like banks.
DeFi replaces banks, brokers, and exchanges with open-source smart contracts. You can lend, borrow, trade, and earn yield without creating an account or going through identity verification (though regulation is changing this).
USDC is one of the most used assets in DeFi. You can lend it on Aave or Compound to earn interest. You can provide liquidity on Uniswap or Curve. You can use it as collateral to borrow other assets.
DeFi offers higher yields than traditional savings accounts, but with higher risk. Smart contract bugs, impermanent loss, and protocol failures are real possibilities. Start small and stick to established, audited protocols.
Related Terms
Smart Contract
Self-executing code deployed on a blockchain that automatically enforces the terms of an agreement.
Yield
The return earned on deposited or lent cryptocurrency, expressed as an interest rate.
Liquidity
How easily an asset can be bought or sold without significantly affecting its price.
APY (Annual Percentage Yield)
The total return on a deposit over one year, including compound interest.
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This definition is provided for educational purposes. USDC.org is an independent resource and is not affiliated with Circle Internet Financial.