Short for decentralized finance, DeFi describes blockchain-based alternative finance systems. It's an umbrella term for peer-to-peer financial services on public blockchains, the most common being Ethereum.
Peer-to-peer meaning that the transactions take place between users directly. In other words, DeFi facilitates the execution of financial transactions through blockchain applications without the need of a financial institution such as a bank or other intermediaries (e.g., brokerages, exchanges etc…).
DeFi platforms enable users to resort to traditional transactions such as lending, earning interest, borrowing, buying insurance, trading derivatives and trading assets.