A decentralized protocol is a set of rules and procedures that govern how decentralized networks operate. These protocols enable peer-to-peer interactions without the need for central authority or intermediaries. In decentralized finance (DeFi), protocols like Uniswap or Compound allow users to trade, lend, or borrow assets directly with each other. Blockchain technology underpins these protocols, ensuring transparency, security, and immutability. Decentralized protocols empower users to control their assets and participate in global financial ecosystems, promoting inclusivity and reducing reliance on traditional financial systems.
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