The DeFi ecosystem is rapidly evolving, offering decentralized financial services like lending, borrowing, and yield farming, primarily built on Ethereum and other blockchains. Key protocols include Uniswap, Aave, and Compound. Growth is driven by the promise of decentralization, transparency, and reduced intermediaries. However, challenges remain, including scalability issues, security concerns, and regulatory uncertainty. The future of DeFi will likely involve more robust Layer 2 solutions to improve transaction speeds and lower costs. Additionally, DeFi will expand to other blockchains, improving cross-chain interoperability. As institutional adoption increases, DeFi could reshape the traditional financial system.