Decentralized finance, often referred to as DeFi, is a movement in the cryptocurrency and blockchain spaces that can be difficult to pin down exactly. It is both a large-scale vision for a new way of conducting financial transactions—free from intermediaries, central authorities, and done exclusively in a peer-to-peer modality—as well as an umbrella term for scores of non-custodial financial products and services known as protocols. DeFi is inextricably linked to the rise of cryptocurrencies, but it is not solely about crypto tokens. Below, we take a closer look at the history of DeFi and how it got to where it is today. Yes, one could point to the launch of Bitcoin in 2009 as the beginning of the DeFi movement. This is true insofar as Bitcoin was responsible for the rise of cryptocurrencies more broadly as an industry. Bitcoin popularized the idea of decentralized tokens and related services like exchanges. However, the Bitcoin ecosystem is not built to enable DeFi protocols. Those rely instead on Ethereum (which was of course also indebted to Bitcoin for its own existence). One of the key developments of Ethereum was the use of smart contracts which allow developers to create a wide variety of decentralized apps, including those related to DeFi. To this day, most DeFi protocols exist in the Ethereum ecosystem.
Full explanation : A Brief History of DeFi.