The Architecture of Decentralised Finance Platforms: A New Open Finance Paradigm

42 Pages Posted: 3 Aug 2020

See all articles by Emilios Avgouleas

Emilios Avgouleas

University of Edinburgh - School of Law

Aggelos Kiayias

University of Edinburgh - School of Informatics

Date Written: August 3, 2020

Abstract

The evolving merger of payments technology with technology underpinning investment markets’ infrastructure can have a great impact on the mode of supply of financial services, notwithstanding technical, legal and regulatory restrictions. One-stop-shop multi-purpose and multi-asset platforms will be a key characteristic of post-COVID-19 finance bringing a radical transformation of the marketplace. Anticipated benefits range from a drastic reduction of intermediary rents and transaction costs to repatriation of investor control and alteration of today’s narrow asset allocation strategies. To facilitate this transformation, we offer a model of decentralised finance that goes far beyond so-called “autonomous” finance. As the technical and regulatory challenges of increasing automation and integration in the supply of investment services will be considerable, a proactive approach is required to resolve these problems. Integrated decentralised platforms are the most promising route to: (a) counter the competitive threat of BigTech, (b) reform investment industry’s narrow asset allocation practices whose fragility has been badly exposed by the pandemic, and, (c) spread equally the dividend of financial development.

Keywords: Open Finance, Decentralised Finance, Investment Democratisation, Cryptographic Integration, Inclusive Finance, Financial Systems, SMEs, Access to Finance, Tokenisation, DLT-Blockchain, Financial Services, FinTech, RegTech, Sustainable Finance, Social Market Economy, Parametrisation

Suggested Citation

Avgouleas, Emilios and Kiayias, Aggelos, The Architecture of Decentralised Finance Platforms: A New Open Finance Paradigm (August 3, 2020). Edinburgh School of Law Research Paper No. 2020/16, Available at SSRN: https://ssrn.com/abstract=3666029 or http://dx.doi.org/10.2139/ssrn.3666029

Emilios Avgouleas (Contact Author)

University of Edinburgh - School of Law ( email )

Old College
South Bridge
Edinburgh, EH8 9YL
United Kingdom

Aggelos Kiayias

University of Edinburgh - School of Informatics ( email )

Old College
South Bridge
Edinburgh, Scotland EH8 9JY
United Kingdom

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