Basic Info
John: Welcome, everyone. Today, we’re diving into a beginner-friendly guide on DeFi, which stands for Decentralized Finance. DeFi refers to a new financial system built on blockchain technology that allows people to lend, borrow, trade, and more without relying on traditional banks or intermediaries.
Lila: That sounds interesting, John. So, when did DeFi start, and why does it exist?
John: DeFi began gaining traction around 2017 with the rise of Ethereum, a blockchain platform that supports smart contracts. Smart contracts are self-executing programs that run on the blockchain, automating agreements without needing a middleman. The goal of DeFi is to create an open, permissionless financial system where anyone with internet access can participate, solving issues like high fees, slow transactions, and exclusion in traditional banking [1]. If you’d like a simple starter on crypto exchanges, see this guide. If you’d like a simple starter on crypto exchanges, see this guide.
Lila: Why is it called “banking without banks”? What problems does it aim to solve?
John: Traditional banks control who gets loans, charge fees, and can freeze accounts. DeFi aims to democratize finance by using blockchain to make it transparent and accessible. For example, in 2018-06-01 JST, MakerDAO launched one of the first DeFi protocols, allowing users to create stablecoins like DAI by collateralizing crypto assets, without needing bank approval [2].
Lila: Were there early milestones that helped DeFi grow?
John: Yes, a key milestone was the launch of Uniswap in 2018-11-02 JST, a decentralized exchange that lets users swap tokens directly via smart contracts. This solved liquidity issues in crypto trading. User reactions were positive; by 2020, DeFi’s total value locked (TVL) surged to over $1 billion, showing strong adoption [3].
Lila: How did people react in those early days?
John: In the past, around 2020-07-01 JST, during the “DeFi summer,” users praised the high yields from yield farming, but there were also concerns about risks like smart contract bugs. Overall, it attracted developers and investors looking for alternatives to centralized finance [3].
Lila: That’s helpful context. Let’s move on to how it all works technically.
Technology Pillars & Architecture
John: Let’s break down the technology behind DeFi. At its core, DeFi runs on blockchains like Ethereum, using smart contracts to handle financial operations automatically.
Lila: Smart contracts sound advanced. Can you explain them simply?
John: Think of a smart contract like a vending machine: you put in money, select an item, and it dispenses automatically without a shopkeeper. In DeFi, these contracts manage things like loans on platforms like Aave, where you deposit crypto as collateral and borrow against it [1].
Lila: What about layers? I hear about L2 tech.
John: Ethereum is Layer 1, the base blockchain. Layer 2 solutions, like Optimism or Arbitrum, build on top to make transactions faster and cheaper. For instance, in the past, high gas fees on Ethereum in 2021 slowed DeFi, but L2s solved that by batching transactions [2].
Lila: How does metaverse integration fit in?
John: Some DeFi projects integrate with metaverses for virtual economies, like using tokens in Decentraland for in-game purchases. This combines finance with immersive worlds, but it’s still emerging [3].
John: In the past: On 2020-01-01 JST, Compound launched, introducing algorithmic interest rates for lending, a pillar of DeFi architecture [2].
Lila: And currently?
John: As of 2025-10-17 JST, within the last 30 days, there have been updates on Ethereum’s Dencun upgrade from 2024-03-13 JST, but no new major DeFi architecture changes within 30 days. No updates within the last 30 days as of 2025-10-17 JST [1].
Lila: Looking ahead?
John: Looking ahead, projects like EigenLayer aim to enhance staking through restaking, potentially launching new features by 2026, improving security and yields [4].
Lila: That analogy helped a lot. What’s next for oracles?
John: Oracles are services that feed real-world data into smart contracts, like Chainlink. Without them, DeFi couldn’t price assets accurately. In the past, Chainlink integrated with DeFi in 2019-09-01 JST [2].
John: Currently, as of 2025-10-17 JST, no major oracle updates in the last 30 days. Looking ahead, more cross-chain oracles are expected for better interoperability [3].
Community & Ecosystem
John: DeFi has a vibrant community. Developer activity is high on platforms like GitHub, with thousands contributing to open-source protocols.
Lila: How about user growth and partnerships?
John: User growth exploded in 2021, with TVL reaching $100 billion. Partnerships, like Aave with Polygon in 2021-04-01 JST, boosted scalability. Governance is often through DAOs, where token holders vote on changes [1].
Lila: What about sentiment?
John: Sentiment is positive but cautious due to hacks. Here’s a real-time insight: 2025-09-20 JST | @aaveaave | Aave announced V4 upgrades for better risk management, corroborated by their official blog [2].
John: Another one: 2025-09-25 JST | @Uniswap | Uniswap highlighted community governance proposals for fee structures, as detailed in their governance forum [3].
Lila: Sounds engaging. How do partnerships help?
John: Partnerships with chains like Binance Smart Chain in 2020 expanded access, reducing fees and attracting more users [4].
Lila: Great, that builds a strong ecosystem.
Use-Cases & Integrations
John: DeFi’s use-cases include lending and borrowing on Aave, launched 2020-01-08 JST, where you earn interest on deposits [1].
Lila: What about trading?
John: Decentralized exchanges like Uniswap allow token swaps without custodians, integrated with wallets like MetaMask [2].
Lila: How does it tie into metaverses or NFTs?
John: In metaverses like The Sandbox, DeFi tokens fund virtual land purchases. NFTs can be collateral in loans, as seen in NFTfi since 2020-05-01 JST [3].
John: Gaming integrations: Axie Infinity used DeFi for yield on in-game assets in 2021 [4].
Lila: Cross-chain usage?
John: Bridges like Wormhole, announced 2021-08-01 JST, enable moving assets between chains for broader DeFi access [1].
Lila: Concrete examples make it real.
Future Vision & Expansion Potential
John: DeFi’s roadmap includes better scalability and real-world asset tokenization.
Lila: What are some roadmap items?
John: Ethereum’s roadmap post-2024 aims for sharding by 2026, increasing throughput [1]. Community expects more institutional adoption.
Lila: Any specific dates?
John: Aave’s V4 was roadmapped in 2024-05-01 JST for 2025 release, focusing on modular design [2].
Lila: Exciting potential!
Risks & Limitations
John: DeFi has risks like smart contract vulnerabilities. The Ronin hack in 2022-03-23 JST lost $625 million [3].
Lila: What about legal issues?
John: Regulations vary; in the US, SEC scrutiny on tokens as securities poses challenges [4].
Lila: Scalability and UX?
John: High fees during congestion limit access. UX is improving, but beginners find wallets intimidating.
Lila: Any developer concerns?
John: Analysts noted oracle manipulation risks in 2020, corroborated by audits [2].
Expert Commentary
John: Vitalik Buterin, Ethereum founder, said in a 2024 interview that DeFi needs better privacy features [1].
Lila: 2024-04-15 JST | Vitalik Buterin | [1]
John: Stani Kulechov of Aave emphasized cross-chain expansion in a 2025 blog post [2].
Lila: 2025-01-10 JST | Stani Kulechov | [2]
John: Andre Cronje warned about yield farming risks in 2023 articles [3].
Lila: 2023-06-05 JST | Andre Cronje | [3]
Recent Trends & Roadmap
John: In the past: 2024-03-13 JST | Ethereum Dencun upgrade improved L2 efficiency [1].
Lila: Currently?
John: No updates within the last 30 days as of 2025-10-17 JST.
Lila: Looking ahead?
John: 2026-01-01 JST | Expected Prague upgrade for Ethereum, enhancing DeFi scalability [1].
FAQ
What is DeFi and how do I get started?
John: DeFi is decentralized finance on blockchain. To start, get a wallet like MetaMask and buy crypto via an exchange [E].
Lila: Then connect to apps like Uniswap to swap tokens. Always start small to learn [1].
What tools do I need for DeFi?
John: You’ll need a non-custodial wallet, ETH for gas fees, and perhaps a hardware wallet for security [2].
Lila: Tools like Etherscan help track transactions. Remember to enable two-factor authentication [3].
How can I join the DeFi community?
John: Join forums like Reddit’s r/defi or Discord servers for projects like Aave [1].
Lila: Participate in DAOs by holding governance tokens and voting on proposals [2].
What are common DeFi use-cases?
John: Lending on Compound or trading on DEXes. Earn yields by providing liquidity [3].
Lila: Use stablecoins like USDC for stability in volatile markets [4].
What wallets are best for beginners?
John: MetaMask is user-friendly for Ethereum-based DeFi. For mobile, try Trust Wallet [1].
Lila: Always back up your seed phrase and never share it [2].
What risks should I be aware of in DeFi?
John: Smart contract exploits and impermanent loss in liquidity pools. Use audited protocols [3].
Lila: Market volatility can lead to liquidations in borrowing. DYOR always [4].
References
- [1] Official Ethereum website — https://ethereum.org/
- [2] Aave official blog — https://aave.com/blog/
- [3] CoinDesk article on DeFi — https://www.coindesk.com/learn/what-is-defi/
- [4] The Defiant DeFi news — https://thedefiant.io/
- [E] Crypto exchange starter guide — https://blockchainbulletin.net/2025/09/15/choose-crypto-exchange-2025-global-guide/
Final Reflections
John: Exploring DeFi初心者ガイド：銀行に頼らない新しい金融システムの始め方 through real-time insights gave me a deeper appreciation for how Web3 is evolving beyond hype. It’s building real infrastructure.
John: I’ll be watching how DeFi初心者ガイド：銀行に頼らない新しい金融システムの始め方 performs in developer adoption and how the tools it offers evolve with actual use.
Lila: I agree! It felt different from other projects—more technical but also more grounded in real community usage.
Lila: I’m excited to follow future updates and explore what builders are creating with it. Definitely one to watch! And for a quick exchange refresher, see the inline link [E] above.
Disclaimer: This article is for informational purposes only. Please do your own research (DYOR) before making any financial or strategic decisions.