Decentralized finance (DeFi) is the combination of open source software, decentralized networks, and lots of smart coders and thinkers that take traditional financial products such as loans, stablecoin, derivatives, escrow, fund raising, and exchanges and convert it into innovative software that is trust-less, transparent, distributed with no need for intermediaries. It is powered by smart contracts and running on different blockchains.
Blockchains such as bitcoin and Ethereum have proven themselves to be excellent and secure store of value for coins and person to person transactions. Decentralized Financial services are being built to use this store of value, akin to traditional banks in the non-digital world.
Funds flowing into DeFi are almost doubling yearly and is around the USD half billion range and rapidly growing with a healthy adoption rate.
DeFi lives mostly on the Ethereum platform which is well established with many developers able to build smart contracts on it. Smart contracts provide the financial services without the need of any central authority, humans, or approvals and delivering most of the services expected from a bank and more.
Maker (https://makerdao.com/en/) is first place in the DeFi list of popular solutions. Maker offers a stablecoin called DAI which is equivalent to the US dollar in value. What distinguishes Maker is that it is completely decentralized and maintains the value of DAI through market incentives rather than centrally pegging it to the Dollar in the way Tether and in the near future Libra would like to do.
To learn more about Maker and how it works, this video does a good job of explaining it.
Compound (https://compound.finance/) is another well know DeFi platform with close to USD 80 million worth of Ethereum in a supplier / borrower marketplace.
The available markets are listed below with some interest rates for both the lender and the borrower.
You supply Dai and can earn interest, or you borrow Dai and pay interest.
All loans are collateralized but this could change based on your online reputation and good standing. No identification or on-boarding process needed, you are identified through your personal wallet address.
Loanscan (https://loanscan.io/) is another interesting project, it collects and compares the different loans in the DeFi world and you can choose the one that suits you. It also shows you the latest loans as they happen. It is very similar to what Open Banking in the traditional banking world does.
In the DeFi world, there are no waiting days or lengthy processes. Just initiate the transaction using Ethereum and the smart contracts remembers your wallet and takes care of everything else.
Browse around https://defipulse.com/ to see other interesting projects in the DeFi world. A few of these projects are still experimental so only invest or participate with money you are willing to lose since they might still be work in progress, regardless, it is a very interesting view of things to come in the very near future.