> ## Documentation Index
> Fetch the complete documentation index at: https://cobo.com/products/agentic-wallet/manual/llms.txt
> Use this file to discover all available pages before exploring further.

# DeFi protocols

> A brief introduction to decentralized finance primitives and how AI agents interact with them.

## 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.

## Key DeFi primitives

| Primitive             | What it does                                                                     | Example protocols            |
| --------------------- | -------------------------------------------------------------------------------- | ---------------------------- |
| Token swaps (DEX)     | Exchange one token for another at a market rate                                  | Uniswap, Curve, Orca         |
| Liquidity provision   | Deposit tokens into a pool to enable DEX trading; earn a share of fees in return | Uniswap v3, Curve            |
| Lending and borrowing | Earn interest by supplying assets; borrow against collateral                     | Aave, Compound               |
| Liquid staking        | Stake native tokens and receive a tradable receipt token                         | Lido (stETH), Jito (jitoSOL) |
| Yield aggregators     | Automatically route and compound positions across protocols to optimize returns  | Yearn, Convex                |

## 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.

## 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](/products/agentic-wallet/manual/learn/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](/products/agentic-wallet/manual/security/policy-engine) — 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.