What is DeFi: uses, real risks and the rules in Brazil

Understanding what DeFi is starts with a simple question: what does a bank or a broker do that a program could not? Decentralized finance is the attempt to answer "almost nothing," replacing the intermediary with contracts that run on a blockchain and that anyone with a wallet can use. The model trades one set of risks for another, and this guide covers how the system works, where the money sits, what goes wrong and what Brazilian rules require.

What changes when there is no intermediary

ethereum.org describes DeFi as an open, global financial system built for the internet age, where products for borrowing, saving, investing and trading work without a central intermediary. The piece that makes it possible is the smart contract: a program published on the blockchain that holds rules and funds and enforces the rules on its own whenever someone interacts with it.

In a DeFi protocol, the deposit goes to a contract whose code is public, and the contract returns it when the condition written into it is met. There is no manager, no opening hours and no account opening. There is code, and the code does exactly what is written, including when what is written contains a mistake.

The size of that system is measurable. On September 30, 2026, DefiLlama counted US$ 102.8 billion deposited in DeFi protocols across all networks, of which US$ 53.5 billion on Ethereum, US$ 6.6 billion on Solana and US$ 5.7 billion on BNB Chain. For comparison, the series peaked at about US$ 133 billion in December 2024, per the same source.

The three uses that hold most of the money

The first is asset exchange. A decentralized exchange has no order book and no intermediary: it has a contract holding a reserve of two assets, and the price is set by the ratio between them. Whoever supplies that reserve earns part of the fee on each trade. The operation runs from your own wallet.

Lending comes next. Credit protocols take deposits of one asset and lend to anyone who posts another asset as collateral, always worth more than the loan. If the collateral falls below the threshold, the contract sells it to repay the debt, with no call, no negotiation and no warning. That is automatic liquidation.

Stablecoins round out the list. A large share of what circulates in DeFi is tokens pegged to the dollar. How they hold the peg and what happens when they do not is covered in what are stablecoins. Around these three uses sit derivatives, insurance, flash loans settled within a single transaction, and staking products that earn on network validation, which we explain in crypto staking explained.

The risks that show up in your statement

The most discussed risk is the exploit. On November 3, 2025, the Balancer V2 protocol lost about US$ 128 million to a rounding error in its pool accounting, across six networks at once, according to DefiLlama's incident record. The contract had been audited. An audit reduces the chance of error; it does not remove it.

A quieter risk hits anyone who supplies liquidity to a decentralized exchange, the impermanent loss: if one of the two assets in the pair doubles in price while the other stays flat, the pool position is worth about 5.7% less than it would if both assets had stayed in the wallet, before counting fees earned. The figure comes from the contract's own formula.

Fraud is the third. A rug pull is a project built to collect deposits and vanish. The fourth is the user's own mistake: approving a malicious contract, signing a transaction without reading it, sending to the wrong network. None of these cases comes with an ombudsman, deposit insurance or mandatory cover.

What Receita Federal and the Central Bank require

DeFi is not illegal in Brazil and it is not rule-free. On the tax side, Normative Instruction RFB 2,291/2025, published on November 17, 2025 and available in Receita Federal's regulations database, created the crypto-asset return known as DeCripto. Since July 1, 2026, an individual resident in Brazil who operates on decentralized protocols, from a self-custody wallet or on a platform abroad, reports the month's operations to Receita whenever the total exceeds R$ 35,000. Swapping one token for another inside a protocol is a disposal and counts toward that sum; any gain follows capital gains rules.

On the Central Bank side, Resolutions BCB 519, 520 and 521, in force since February 2, 2026, treat a transfer between an authorized provider and a self-custody wallet as an identified, reported operation. The protocol itself is not regulated, but the door through which reais enter and leave is.

How to approach it prudently

The prudent path starts small and with a defined goal. Anyone who wants to learn uses a separate wallet, funded with an amount they can lose, and makes a trade worth a few dollars before any larger deposit. Every contract approved should be checked against the protocol's official address.

Protocols with years of operation, public audits and large reserves tend to bring fewer surprises than launches with high yields and anonymous teams. Every operation needs to be recorded with date, quantity and value in reais, because DeCripto and the capital gains rules require it and no protocol sends a statement.

The crypto-asset market involves high risks, including significant volatility and the possibility of losing the invested capital. This article is educational and does not recommend using any protocol or buying any asset. How Vault defines with each client the weight of crypto within their wealth is described in crypto advisory: how it works.

Frequently asked questions

Is DeFi legal in Brazil?

Yes. There is no ban on using decentralized protocols. What exists is a duty to report: operations above R$ 35,000 in a month have gone into DeCripto since July 2026, and the gain on swapping or selling tokens is taxed as a capital gain.

Do I have to declare what I do in DeFi?

Yes, if you are a tax resident in Brazil. Swaps inside a protocol are disposals, the balance of each token goes in the assets schedule of the annual return, and monthly operations above R$ 35,000 require DeCripto.

Can I lose money in DeFi without being hacked?

Yes. Automatic liquidation of a loan, impermanent loss in a liquidity pool and a fall in the asset itself are common losses that involve no attack.

Are DeFi and staking the same thing?

No: staking is validating a proof-of-stake network in exchange for rewards, while DeFi is the set of applications built on top of the network, such as exchanges and credit protocols. Many liquid staking products live in DeFi.

Let's talk

If you already have funds in DeFi protocols or are deciding whether it is worth it, the right question is what share of your wealth can live with contract risk. Vault Capital is a securities advisory firm authorized by the CVM under CVM Resolution 19/2021 and never takes custody of client assets. The first conversation is about placing DeFi correctly inside your plan.