How do decentralized finance (DeFi) platforms utilize blockchain technology?

Decentralized finance (DeFi) platforms leverage blockchain technology to enable financial services without the need for intermediaries, such as banks or financial institutions. This is achieved through smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. These smart contracts operate on a decentralized network, allowing users to engage in peer-to-peer transactions, lending, borrowing, trading, and other financial services directly on the blockchain.

By removing intermediaries, DeFi platforms can offer services that are often more accessible, transparent, and efficient, as users can interact directly with the protocol using their digital wallets. The entire process is governed by programmable rules and automatic execution, which enhances security and reduces the potential for human error or fraud.

The other options do not accurately reflect how DeFi utilizes blockchain technology. Creating physical branches for banking services contradicts the very essence of decentralization. Issuing currencies outside the blockchain does not utilize the technology’s capabilities effectively, as DeFi is inherently built on blockchain. Lastly, limiting access to financial products is counterproductive to the DeFi ethos, which aims to provide open access and inclusivity for all users regardless of their background.