DeFi is a collective term for applications and protocols developed on the Ethereum network to enable everything from loans to investing in stocks without relying on a third party to conduct business. Although there are DeFi solutions on other blockchains, Ethereum has been dominant so far.
DeFi applications can interact with each other through the Ethereum network. This creates synergies that in the long run may affect and transform the entire financial industry. The applications and protocols are nested together by broadcasting on the Ethereum blockchain, which allows for a fluid dynamic between the different DeFi services. Protocols and applications can be developed and initialized based on the existing DeFi solutions, like a set of Legos. In the future, these solutions can potentially cover all the financial needs a user may have. The system is attractive as it removes the reliance on an active third party to facilitate trades in addition to the many synergies it creates.