DeFi Guides
By Twin · CoinHours Editorial · Maintained by CoinHours Editorial · Reviewed as the market evolves
Decentralised Finance — DeFi — replicates the core building blocks of the traditional financial system (lending, borrowing, trading, derivatives, asset management) using open-source smart contracts on public blockchains. There are no account managers, no opening hours, and no permission required to use the protocols. Everything runs on code, settled on-chain, with assets held by the user rather than an intermediary.
These guides cover how the major DeFi primitives actually work: automated market makers and on-chain liquidity, lending markets and collateralised borrowing, yield farming and liquidity-pool incentives, proof-of-stake staking, Layer 2 scaling networks that make DeFi affordable, and the broader landscape of DeFi tokens and governance. We also focus heavily on the risks — smart-contract exploits, impermanent loss, liquidation cascades, oracle failures, and the regulatory pressure that has reshaped the sector since 2022.
DeFi can produce real, sustainable yield, but most of the catastrophic losses in crypto over the last cycle came from DeFi protocols that looked safe until they weren't. The material here is designed to give you a framework for evaluating protocols on their merits rather than chasing headline APYs.
Key Takeaways
- •DeFi protocols are open-source financial primitives — lending, trading, staking — that run on smart contracts without intermediaries.
- •Yields come from real sources (trading fees, borrower interest, staking rewards) or from token emissions that may not be sustainable.
- •Smart-contract risk, impermanent loss, and liquidation cascades are the dominant ways DeFi users lose money.
- •Layer 2 networks have made DeFi usable at retail scale by collapsing Ethereum gas fees by 10-100x.
- •DeFi income and disposals are taxable events in Australia — yield, swaps, and LP entry/exit all need to be tracked.