Web3 and DeFi keep popping up everywhere. Sometimes they’re used interchangeably, other times like they’re total opposites. So, what’s the real story? Are they the same thing? Are they connected? Or are they just crypto buzzwords thrown around to confuse everyone?

If this sounds like you, we’ve got you. We’ll go over what Web3 and DeFi actually are, how they overlap, how they’re different, and why knowing what sets them apart matters, especially if you’re using a Web3 crypto wallet like Velto to navigate this new digital space.

First Things First, What is Web3?

Web3 (short for Web 3.0) is the next evolution of the internet. It’s what happens when we take everything we’ve learned from Web1 (static websites) and Web2 (interactive apps and platforms), then add decentralization, digital ownership, and blockchain into the mix.

Simply put, Web3 provides the space where you can have greater security, privacy and control over your online experience. With Web2, companies own your data (just like how it works in popular social platforms), but with Web3, you can actually own. It’s not a single app or platform; it’s an ecosystem of tools and technologies that give power back to users instead of middlemen. 

From finance and gaming to social media and file storage, you won’t need permission to publish, transact, or access content. You just do it; thanks to decentralized protocols.

And What About DeFi?

DeFi is short for decentralized finance, and it’s exactly what it sounds like: financial services that run on blockchains instead of banks. It’s about lending, borrowing, saving, trading, and earning interest, but with no central institution managing it. In DeFi, smart contracts do the heavy lifting, replacing the roles traditionally played by banks or brokers.

Some DeFi tools and platforms include:

• Non-custodial wallets like Velto
• Decentralized exchanges (DEXs)
• Lending protocols
• Yield farming platforms

DeFi is one of the biggest and fastest-growing sectors in Web3 because it gives people access to financial tools without needing permission, credit scores, or even a bank account. All you need is a Web3 crypto wallet and an internet connection.

DeFi vs. Web3: The Key Differences

While DeFi and Web3 are deeply connected, they’re not the same thing. Basically, Web3 is the world, a decentralized internet that covers everything from identity to media to governance. Meanwhile, DeFi is a city inside that world, a specific set of financial tools and protocols that live on the blockchain.

Here’s a clearer side-by-side breakdown to help illustrate the distinction:

How DeFi Fits Into Web3

DeFi is one of the most important pillars of the Web3 ecosystem. It’s what makes the idea of financial freedom real. Want to swap tokens without going through an exchange? That’s DeFi. Want to earn interest on your crypto without using a bank? Also DeFi. 

But it doesn’t stop there. DeFi unlocks access to other areas of Web3, like:

• Decentralized identity and reputation systems, where your on-chain activity can serve as your financial track record
• Play-to-earn and GameFi ecosystems, where in-game assets and currencies are often powered by DeFi infrastructure
• NFT lending and fractional ownership, which let users to stake or borrow against their digital assets
• DAOs (Decentralized Autonomous Organizations) that use DeFi tools for treasury management and community governance
• Cross-chain bridges and Layer 2 scaling solutions, which rely on DeFi protocols to move value efficiently across blockchain networks

So while DeFi is the financial layer, Web3 is the full operating system. And with tools like Velto (designed to be a fast, secure, and easy-to-use Web3 crypto wallet), you can explore both worlds seamlessly.

How It All Comes Together

Web3 is still evolving, and so are the possibilities. From new ways to earn and connect, to entirely new models of governing communities, the future is being built in real time. DeFi and Web3 will grow side by side for sure, but knowing the difference between the two gives you a serious edge as you explore the space.

If you’re just getting started, the smartest move is to set up your Web3 crypto wallet—with Velto, of course. It’s where your identity, assets, and activity will live, so we've made it extra secure, intuitive, and incredibly easy.

Send, receive, and swap your way through the future. Create your Velto wallet now.

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