A smart contract is a piece of code that runs automatically when certain conditions are met. It acts like a set of digital rules that ensure transactions happen without needing a middleman, such as a bank. In DeFi platforms, smart contracts help keep transactions transparent, fast, and secure. These contracts work on the blockchain, meaning no one can change or cheat the system once a contract is deployed.

DeFi, or Decentralized Finance, is a way to use financial services like borrowing, lending, trading, and earning interest without relying on traditional banks or middlemen. Instead, it uses blockchain technology (like Ethereum) and smart contracts to create a secure, open, and transparent system that anyone with an internet connection can access.