Key Terminologies in DeFi Projects Decentralized finance applications allow users to fully control their assets and maintain non-custodial interactions with financial systems. Decentralization in DeFi projects means that its users have relinquished absolute authority for executing transactions to smart contracts.
Smart contracts are lines of code stored in a the blockchain that is automatically executable once pre-defined conditions are satisfied as programmed. A major benefit of smart contracts is their ability to enhance an agreement between parties without intermediary involvement.
A blockchain is a sharable and distributed ledger that records all transactions made in real-time. Once a transaction is completed and validated using a consensus protocol, it is digitally recorded and linked to provide a clear and distinct history.
It is worth noting that blockchain encrypts each transaction for security purposes—however, all participants in a trade hold a copy of the history of the transaction for transparency aims.