An Introduction to Decentralized Finance (DeFi)

Johannes Rude Jensen, Victor von Wachter, Omri Ross

Abstract


Decentralized financial applications (DeFi) are a new breed of consumer-facing financial applications composed as smart contracts, deployed on permissionless blockchain technologies. In this article, we situate the DeFi concept in the theoretical context of permissionless blockchain technology and provide a taxonomical overview of agents, incentives and risks. We examine the key market categories and use-cases for DeFi applications today and identify four key risk groups for potential stakeholders contemplating the advantages of decentralized financial applications. We contribute novel insights into a rapidly emerging field, with far-reaching implications for the financial services.

Keywords:

Blockchain; Decentralized Finance; DeFi; Smart Contracts

Full Text:

PDF


DOI: 10.7250/csimq.2021-26.03

Refbacks

  • There are currently no refbacks.


Copyright (c) 2021 Johannes Rude Jensen, Victor von Wachter, Omri Ross

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.