Decentralized Finance (DeFi)

Abstract

Chapter 8 discusses the role of finance in the evolution of decentralized systems. In the 2020s, the market for DeFi has started to take off but fully decentralized DeFi solutions still have a long way to go. Because the decentralized economy is still missing the major institutions that society relies on to conduct profitable business, especially a secure and meaningful system for evaluating reputation for anonymous supranational partners, and an effective and dynamic governance system, it will not be able to fully proliferate until these systems have established themselves. Once these core decentralized infrastructure products become available, the decentralized economy becomes viable. Key indicators include cryptocurrency being used in authentic transactions such as insurance and equities in broad segments of industry and the tokenization of commodities and properties in a mainstream environment.

Keywords: Decentralization, DeFi

JEL Classification: K32