Defi makes it possible to do all the things that traditional finance does, but with a catch. It eliminates centralized authority. The transaction in decentralized finance does not go through any intermediaries. The transactions are peer-to-peer.
For instance, let's say you want to buy a loan. In traditional finance, you'll go to the bank and get a loan. The bank is the intermediary. It takes money from people as reserves, generates that cash flow, and gives loans in expecting profits from the interest rates. What if we replace the banks and the functionality of banks and its working is done via codes and smart contracts? That’s what Decentralized Finance can offer.