DeFi: from code to shared records
* Findigest is an informational website about decentralized finance, commonly called DeFi.
* It explains how blockchain records, digital assets, and software rules fit together.
* The articles describe concepts and processes without giving instructions for financial decisions.
DeFi refers to financial arrangements that use programs on a blockchain to record and carry out transactions. A network keeps the records, while code defines how particular instructions are handled. These roles help explain the subject, but the word decentralized does not describe every part of a system equally. Control over an interface, a data source, and a contract can rest with different participants.
The distinction between shared records and the software that acts on them remains important when reading about DeFi. A ledger can make activity visible while the rules that govern a particular arrangement stay defined in code. Understanding the difference helps keep descriptions accurate without turning them into instructions for any specific action.
Core concepts
The parts of a DeFi system
A DeFi application brings together several layers. A blockchain keeps shared records, a smart contract contains program instructions, and an interface displays information. Each layer has a distinct role in the overall process. Understanding those roles means separating what the network records from what a program executes and what a person sees on a screen.
Shared records
A blockchain records transactions across a network of computers. Participants follow a common set of rules for accepting records. The ledger provides a history of activity, while the network determines which transactions become part of that history.
Program rules
A smart contract is code stored on a blockchain. It processes an instruction when its conditions are met. Its behavior depends on the code, the information available to it, and the permissions attached to the particular arrangement.
Digital assets
Tokens are entries represented within a blockchain system. Their purpose depends on the rules that define them. A token can represent a unit used by an application, a record of participation, or a particular claim within a protocol.
User interfaces
An interface presents information from a blockchain in a readable form. It may show balances, transaction records, or contract details. The interface is a separate software layer, and its display should be distinguished from the underlying records and rules.
Transaction context
From instruction to record
An instruction passes through several stages before it appears in the shared transaction history.
A transaction starts with a proposed instruction. A digital signature associates that instruction with a blockchain address, and the network checks it against the relevant rules. If accepted, the transaction becomes part of the shared record. Some transactions call a smart contract, which can update its stored information or interact with another contract. This sequence describes the software process; it does not establish that an application is suitable for any particular use.
Protocol design
The rules and connections behind a protocol
A protocol defines how its parts operate together. Some arrangements rely on data supplied from outside the blockchain, such as a reference value or an event record. Other arrangements include permissions held by particular addresses. These dependencies matter when describing decentralization: a shared ledger, a public interface, and control over program settings are separate features. None of those features, by itself, describes the whole system.
Reading the terminology
The same term can describe different roles within a DeFi system.
Words such as wallet, contract, and governance have particular meanings in DeFi. A wallet manages the keys used to authorize blockchain instructions; the assets are represented in the ledger. Governance refers to procedures for making decisions about a protocol. Those procedures can involve votes, assigned permissions, or other arrangements. The Info page explains these distinctions, while About describes the scope of Findigest and its approach to the subject.
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