What is DeFi?
Decentralized Finance (DeFi) is a set of financial services built on blockchains. Instead of relying on banks or brokers, DeFi uses smart contracts — self-executing programs — to handle deposits, loans, trades, and more.
Anyone with a wallet can participate. There are no applications to fill, no credit checks, no office hours. The code runs 24/7, open to everyone.
Lending and borrowing
DeFi lending works like a savings account with higher yields. You deposit tokens into a lending protocol, and borrowers pay interest to use them.
Supplying (Lending)
You deposit tokens into a protocol like Aave or Compound. You earn interest continuously — no lock-up period, withdraw anytime. CleanSky shows this as "Savings".
Borrowing
You lock collateral (e.g., ETH) and borrow other tokens (e.g., USDC) against it. If your collateral drops too much in value, it can be liquidated. CleanSky shows this as "Loan".
Health factor is a number that shows how safe your loan is. Above 1.5 is generally safe. Below 1.0 means liquidation. CleanSky translates this into visual progress bars so you don't need to calculate it yourself.
Major lending protocols
Aave V3, Compound V3, Morpho, SparkLend, Kamino (Solana), Venus (BNB Chain), Radiant, and Silo — all supported by CleanSky across multiple chains.
Staking
Staking means locking your tokens to help secure a blockchain network. In return, you earn rewards — typically 3–8% annually for major networks.
Native staking
Lock tokens directly with the network (e.g., staking ETH on Ethereum). Tokens are locked for a period. CleanSky shows this as "Time-locked savings".
Liquid staking
Stake through a protocol like Lido or Jito and receive a liquid receipt token (stETH, JitoSOL) that you can use elsewhere in DeFi while still earning staking rewards.
Major staking protocols
Lido (stETH), Rocket Pool (rETH), Jito (JitoSOL), Marinade (mSOL), ether.fi (eETH), Stader, and Sanctum — among 29+ liquid staking protocols tracked by CleanSky.
Liquidity pools and DEXs
A Decentralized Exchange (DEX) lets users trade tokens without a centralized order book. Instead, trades execute against liquidity pools — pools of tokens deposited by users.
If you provide liquidity (become an LP), you earn a share of trading fees. However, you're exposed to impermanent loss — the risk that price changes reduce the value of your deposit compared to simply holding the tokens.
Liquidity pools are one of the most important — and misunderstood — concepts in DeFi. Read our complete guide to liquidity pools and impermanent loss →
Major DEX protocols
Uniswap V3, Curve, Raydium, Orca, PancakeSwap, Balancer, Aerodrome, Velodrome, and Camelot — across Ethereum, Solana, and Layer 2 networks.
Vaults and auto-compounding
Vaults are smart contracts that automate yield strategies. You deposit tokens, and the vault automatically harvests rewards, reinvests them, and compounds your returns — saving you gas fees and time.
Think of them as managed investment funds, but run by code instead of fund managers. Major vault protocols include Yearn V3, Beefy, Convex, and Sommelier.
Restaking
Restaking lets you take tokens that are already staked (like stETH) and stake them again to secure additional networks. This earns extra yield but adds another layer of complexity and risk.
Protocols like EigenLayer, Symbiotic, and Babylon are leading restaking infrastructure. CleanSky tracks these positions and their associated risk vectors.
Yield farming
Yield farming means actively moving capital between protocols to maximize returns. Farmers deposit into pools or vaults that offer incentive rewards (typically the protocol's governance token) on top of base yields.
It can be lucrative but requires active management and understanding of the risks involved — impermanent loss, smart contract risk, and token price volatility.
Derivatives
DeFi derivatives let you trade with leverage, options, and futures — without a traditional exchange.
Perpetuals
Futures contracts with no expiration date. Trade with leverage (2x–50x) on protocols like Hyperliquid, GMX, and Jupiter Perp. CleanSky shows these as "Leveraged operations".
Options
Contracts giving the right (not obligation) to buy or sell at a set price. More complex instruments available on protocols like Lyra and Dopex.
Approvals and permissions
Before a DeFi protocol can move your tokens, you must approve it — granting the smart contract permission to access a specific token. These approvals persist even after you withdraw, which can be a security risk if the contract is compromised.
CleanSky's Security tab scans all your active approvals, classifies them by risk level, and highlights any that point to suspicious or compromised contracts.
Real World Assets (RWA)
RWAs are traditional assets — government bonds, real estate, commodities — represented as tokens on a blockchain. They bring the stability and yield of traditional finance into the DeFi ecosystem.
Protocols like Ondo (OUSG, USDY), Securitize (BUIDL), and Centrifuge tokenize U.S. Treasuries, money market funds, and credit facilities. CleanSky tracks these as a distinct economic category.
Next: Learn how CleanSky organizes all these position types into a clear, multi-dimensional model that makes sense of your full portfolio.
See where your money is across lending, staking, pools, and vaults — automatically detected and clearly categorized.