The biggest sector for decentralized finance is lending & borrowing crypto assets. Several high quality products have been built that allow users to borrow and lend directly on the blockchain with no intermediaries. Decentralized lending products are available to anyone, anywhere, and require only a wallet to use.
Lending: Crypto holders can lend on decentralized lending platforms to earn passive income on their holdings through interest fees paid by borrowers. This is an attractive option to lenders as they can earn relatively low risk interest on their existing holdings without entrusting their private keys to a 3rd party centralized service.
Borrowing: The dominant use case for borrowing crypto is margin trading. Borrowing allows traders to get leverage which multiplies gains and losses while trading, as well as short selling, a trading strategy which makes money when the price of an asset goes down. Currently, all relevant decentralized lending platforms use a form of borrowing called collateralized borrowing. Collateralized borrowing means that borrowers must lock up collateral of greater value than the value of their borrow. The collateral serves to ensure lenders will be repaid even if the borrower never repays the loan.