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What is DeFi

Decentralized Finance (DeFi) is a set of financial services built on public blockchains. DeFi protocols run as open-source smart contracts — typically requiring no accounts, no KYC, and no intermediaries. All logic and balances are on-chain and publicly verifiable.

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Key DeFi primitives

PrimitiveWhat it doesExample protocols
Token swaps (DEX)Exchange one token for another at a market rateUniswap, Curve, Orca
Liquidity provisionDeposit tokens into a pool to enable DEX trading; earn a share of fees in returnUniswap v3, Curve
Lending and borrowingEarn interest by supplying assets; borrow against collateralAave, Compound
Liquid stakingStake native tokens and receive a tradable receipt tokenLido (stETH), Jito (jitoSOL)
Yield aggregatorsAutomatically route and compound positions across protocols to optimize returnsYearn, Convex

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DeFi risks

Smart contract risk — Protocols can contain bugs or be exploited. Prefer audited protocols with long track records. Price impact and slippage — Large trades move the market price. Always set a minimum acceptable output when swapping. Liquidation risk — Borrow positions are liquidated automatically if collateral value falls too far. Agents managing leveraged positions must monitor health continuously. Impermanent loss — Providing liquidity may return less value than simply holding the tokens if prices diverge significantly.

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How agents interact with DeFi

An agent executes DeFi operations by calling smart contracts — the same way any on-chain participant would. See Smart contracts for how contract calls are structured. The difference with Cobo Agentic Wallet is that every contract call is validated against the owner’s Pact policy — a configurable ruleset that defines which contracts, which functions, and which parameter limits the agent is allowed to use — before it is signed and broadcast. The agent operates autonomously within those bounds. No manual approval is needed per transaction unless a policy threshold is exceeded.