Just to add some idea about how DEFI exactly works. I tried to read some articles about DEFI and I think it's pretty interesting. One of the innovative ideas that DEFI created was "Flashloans".
It's not a new idea for other but I think it's also good to discuss though. Aave is an example of lending protocol. It looks like a margin trading but here you can borrow and lend tokens. It started around 2020 and it still operating until now.
In the article that I had read, it says that you can borrow a massive amount of tokens without collateral. I don't know if it works for a long run.
Just wanted to add a comment here on DEXs -- I saw Edwarded already explained about AMM and orderbook DEXs (defi now is normally associated with AMMs so it's just a large common pool where anyone can contribute asset pairs to liquidity).
I think the worst thing that you can experience in using DEX is trading fees since they are using AMMs, I think most of their profits will come to the trading fees. What might happen of there is no liquidity at all?
And as I have seen also your post, I think our security and investment are being compromised since we have to lock our for a period of time.
Anyway, before I heard already about uniSWAP and DYDX. Maybe, there are still cool features that I need to explore in those DEX.
Reference:
https://defiprime.com/flahloans-comparison