In DeFi, decentralization refers to participants engaging directly without needing a centralized coordinator or intermediary. This type of participation contrasts with centralized approaches where interactions must involve a single or a small number of entities.

The primary objective of such systems is to prevent a single or a small number of points of manipulation, censorship, authority, corruption, or destruction.

Decentralized systems are also more resilient to technical problems resulting in outages due to failure of critical infrastructures such as DNS servers, data-centers, connection or routing problems, or even to inevitable black swan events like bit-rot or single-event-upsets.

Decentralization is achieved by employing peer-to-peer technologies and a consensus mechanism that enables each peer to derive, agree on, and share a trusted global state.

Developing decentralized solutions is relatively more complex when compared to centralized ones. Furthermore, maintaining and operating decentralized solutions is more costly than centralized solutions since they involve replicating data and functionality across every peer. Each node also needs to support multiple connections to be considered truly peer-to-peer. Nonetheless, certain critical services must possess such properties to be considered genuinely trustworthy and secure.

Another closely related aspect that is also critically important is that most DeFi projects release their source codes in a free and open way.