DeFi in 5 Minutes
DeFi (Decentralized Finance) refers to financial services that work without banks or intermediaries. Everything runs through smart contracts on the blockchain.
What actually changes
DeFi has no registration, no business hours, no country. That's true. But "permissionless" doesn't mean "risk-free" or "nobody can touch you" — why the system was designed this way, and what it doesn't give you.
| CeFi (Binance, your bank) | DeFi (Uniswap, Aave) | |
|---|---|---|
| To get started | Account + KYC + approval | Just a wallet |
| Hours | Business days, with settlement | 24/7, holidays included |
| Who holds your money | The company | You |
| If you make a mistake | There's support | Nobody. Zero. |
| Who can freeze you | The exchange, a judge, your government | The token issuer, if the token allows it |
"Nobody can block you" is only half true
The protocol can't: Uniswap has no button to freeze your wallet.
But the token can. USDC and USDT can be frozen inside your own wallet, because they have an issuer with a button for it. ETH, BTC and SOL don't.
→ Who can freeze your stablecoins · How to check it yourself
The full difference between trading on a CEX and trading in DeFi is covered in Binance vs Uniswap.
Your DeFi Wallet
To use DeFi you need a self-custody wallet like Metamask, Phantom or Trust Wallet.
Every address you generate comes from the same seed phrase, even though they look different from each other:
bc1q39v…a0yf0x834fC7…bB10D8Lu3nt…KD23Important
If you use the same seed phrase in Metamask, Phantom and Trust Wallet, all three will control the same wallet. But you'll see different balances, because they don't all support the same networks.
Don't memorize which wallet supports which network: it changes often. For years Metamask was EVM-only and Phantom was Solana-only; today both support both and keep adding networks.
The rule that does hold up: if you don't see your funds, you're almost always looking at the wrong network — they weren't lost. Check your wallet's network selector before panicking.
Buying Stablecoins Cheaply
To use DeFi, the most practical approach is to start with USDC or USDT.
| Method | Process | Cost |
|---|---|---|
| Coinbase | Buy USDC → send to Solana or Base | Free |
| Binance/OKX | Local deposit → USDT → withdraw to a cheap network | ~$1 |
| Bitso (Mexico) | SPEI → USDC → send to whichever network you want | Variable |
Cheaper networks
Solana, Arbitrum, Base and Polygon have very low fees (< $0.10). Avoid Ethereum mainnet for small transactions.
Bridges: Moving Tokens Between Blockchains
Every blockchain is its own universe. USDC on Solana is not the same as USDC on Ethereum — they're different contracts.
To move tokens between networks you need a bridge:
| Bridge | Supported networks |
|---|---|
| Wormhole | Ethereum, Solana, Arbitrum, Base, Polygon |
| Stargate | Ethereum, Arbitrum, Optimism, Base |
| Portal Bridge | Multi-chain |
Sometimes it's cheaper
Selling on one network and rebuying on another through a CEX can be cheaper than using a bridge, especially for large amounts.
Using a DEX From Your Wallet
A DEX (decentralized exchange) lives 100% on the blockchain. No registration needed.
How is this different from buying on Binance?
It looks the same on screen, but underneath they're completely different things: who holds your money, who you're trading against, and who decides what can be traded. See Binance vs Uniswap.
Plenty of tokens live only here for months, because reaching a CEX is a process that takes time: who buys early, and who they sell to.
Popular DEXs:
- Jupiter (Solana, aggregator) — jup.ag
- Uniswap (Ethereum, Base, Arbitrum) — app.uniswap.org
- Hyperliquid (orderbook L1) — app.hyperliquid.xyz
The full route to Hyperliquid, step by step
It's the DEX that generates the most questions, and almost none of them are about trading: they're about how to get there. Which wallet works, why the USDC won't move, what HyperEVM is, and how to tell spot from perps before the wrong button.
Wallets have a built-in browser
Metamask, Phantom and Trust Wallet include a browser. Example with Jupiter:
- Open Phantom
- Go to "Browser"
- Go to: https://jup.ag
- Click Connect Wallet
- Phantom will ask you to sign
- Done! You can now swap
Good to know
Connecting a wallet doesn't move money. It only shares your public address with the page.
Sign vs Approve: the critical difference
In DeFi everything lives in smart contracts. When you interact with one, you're asked to sign. But there are two very different types:
"Sign" (simple signature)
- Doesn't move funds
- Used for login, confirmations, messages
- It's safe (as long as you're on the right page)
"Approve" or "Sign Contract"
- You're giving a smart contract permission to move your tokens
- This is where 90% of hacks happen
- If you sign a malicious contract → your wallet gets drained
Careful with Approve
Approve USDC for this contract
The contract will be able to move all your USDC, today or two years from now.
Never do "Approve Unlimited" without checking. Use revoke.cash to see and revoke permissions.
And have more than one wallet
One for savings that almost never signs anything, and one for daily use. If the daily one gets hacked, you don't lose everything. → How to split them
DeFi Activities
| Activity | What it is | Risk | More info |
|---|---|---|---|
| Swap | Exchange tokens | Low | Your first swap |
| Lending | Lend and earn interest | Medium | Lending |
| Staking | Secure the network | Medium | Staking |
| Vaults | Automated strategies | High | Vaults |
| Perps | Leveraged trading | Very High | Perps |
You can lend your tokens and earn interest, or put them up as collateral and borrow against them. If your collateral's value falls too much, the contract sells it automatically: that's a liquidation, and it's the main risk.
Congratulations!
If you made it this far, you now know the essentials to get started in DeFi.
To keep going, explore:
- DEXs — Trading without intermediaries
- Hyperliquid from scratch — the full route, with its pitfalls
- Staking — Earn rewards
- Vaults — Automated strategies
- Security — Protect your seed phrase
- Multisig — Split the signature across several devices
- Smart Contracts — Understand what you're signing
3 Golden Rules
- Never share your seed phrase — not with "tech support", not with anyone
- Don't sign contracts you don't understand — if you don't know what it does, don't approve it
- Start by testing everything with $1 — learn before risking more