ETH plays a central role in decentralized finance (DeFi) as it serves as the primary currency and backbone of many DeFi protocols and applications. DeFi refers to the ecosystem of financial applications built on blockchain networks, primarily Ethereum, that aim to provide open, permissionless, and transparent financial services.

ETH is used as a medium of exchange and a store of value within the DeFi ecosystem. It is utilized for various purposes such as lending and borrowing, decentralized exchanges, yield farming, liquidity provision, and synthetic asset creation. Many DeFi protocols require users to lock their ETH as collateral to access loans or participate in yield-generating activities.

Additionally, ETH serves as the primary trading pair and liquidity provider for numerous tokens and assets within DeFi platforms. It enables seamless and trustless transactions between different decentralized applications, facilitating the interoperability and composability of the DeFi ecosystem.

Furthermore, ETH holders can participate in the governance and decision-making processes of DeFi protocols by staking their ETH and earning governance tokens, allowing them to influence protocol upgrades, fee structures, and other key parameters.

Overall, ETH's role in DeFi is pivotal, providing the financial infrastructure, liquidity, and utility necessary for the growth and functionality of the decentralized finance ecosystem.