Foundations

DeFi begins with a shared execution and settlement substrate. These foundations explain how the system records state, who can authorize changes, how programs apply financial rules, when results become safe to rely on, and what changes when two chains communicate.

Follow the dependency order:

1. Blockchain — the replicated ledger and state machine.
2. Wallets and keys — the interface and authority behind account actions.
3. Transactions and gas — authorized state changes and resource metering.
4. Smart contracts — executable rules over assets, claims, and permissions.
5. Settlement and finality — when applications can rely on accepted history.
6. Bridge — explicit verification and accounting across isolated chains.

One diagnostic for every foundation

Ask which state is authoritative, who can authorize or reorder a change, which assets and claims are created, what confirmation rule a dependent system uses, who controls upgrades or recovery, and who absorbs loss when an assumption fails. “On-chain” is a location for rules and evidence, not a complete trust model.