A Review on Decentralized Finance Ecosystems
The future of the internet is moving toward decentralization, with decentralized networks and blockchain technology playing essential roles in different sectors. Decentralized networks offer equality, accessibility, and security at a societal level, while blockchain technology guarantees security, a...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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MDPI AG
2024-02-01
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| Series: | Future Internet |
| Subjects: | |
| Online Access: | https://www.mdpi.com/1999-5903/16/3/76 |
| _version_ | 1797241002355851264 |
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| author | Andry Alamsyah Gede Natha Wijaya Kusuma Dian Puteri Ramadhani |
| author_facet | Andry Alamsyah Gede Natha Wijaya Kusuma Dian Puteri Ramadhani |
| author_sort | Andry Alamsyah |
| collection | DOAJ |
| description | The future of the internet is moving toward decentralization, with decentralized networks and blockchain technology playing essential roles in different sectors. Decentralized networks offer equality, accessibility, and security at a societal level, while blockchain technology guarantees security, authentication, and openness. Integrating blockchain technology with decentralized characteristics has become increasingly significant in finance; we call this “decentralized finance” (DeFi). As of January 2023, the DeFi crypto market capitalized USD 46.21 billion and served over 6.6 million users. As DeFi continues to outperform traditional finance (TradFi), it provides reduced fees, increased inclusivity, faster transactions, enhanced security, and improved accessibility, transparency, and programmability; it also eliminates intermediaries. For end users, DeFi presents asset custody options, peer-to-peer transactions, programmable control features, and innovative financial solutions. Despite its rapid growth in recent years, there is limited comprehensive research on mapping DeFi’s benefits and risks alongside its role as an enabling technology within the financial services sector. This research addresses these gaps by developing a DeFi classification system, organizing information, and clarifying connections among its various aspects. The research goal is to improve the understanding of DeFi in both academic and industrial circles to promote comprehension of DeFi taxonomy. This well-organized DeFi taxonomy aids experts, regulators, and decision-makers in making informed and strategic decisions, thereby fostering responsible integration into TradFi for effective risk management. This study enhances DeFi security by providing users with clear guidance on existing mechanisms and risks in DeFi, reducing susceptibility to misinformation, and promoting secure participation. Additionally, it offers an overview of DeFi’s role in shaping the future of the internet. |
| first_indexed | 2024-04-24T18:16:24Z |
| format | Article |
| id | doaj.art-ea8c1939f33248e8a6933c3249f1140a |
| institution | Directory Open Access Journal |
| issn | 1999-5903 |
| language | English |
| last_indexed | 2024-04-24T18:16:24Z |
| publishDate | 2024-02-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Future Internet |
| spelling | doaj.art-ea8c1939f33248e8a6933c3249f1140a2024-03-27T13:42:13ZengMDPI AGFuture Internet1999-59032024-02-011637610.3390/fi16030076A Review on Decentralized Finance EcosystemsAndry Alamsyah0Gede Natha Wijaya Kusuma1Dian Puteri Ramadhani2School of Economics and Business, Telkom University, Bandung 40257, IndonesiaSchool of Economics and Business, Telkom University, Bandung 40257, IndonesiaSchool of Economics and Business, Telkom University, Bandung 40257, IndonesiaThe future of the internet is moving toward decentralization, with decentralized networks and blockchain technology playing essential roles in different sectors. Decentralized networks offer equality, accessibility, and security at a societal level, while blockchain technology guarantees security, authentication, and openness. Integrating blockchain technology with decentralized characteristics has become increasingly significant in finance; we call this “decentralized finance” (DeFi). As of January 2023, the DeFi crypto market capitalized USD 46.21 billion and served over 6.6 million users. As DeFi continues to outperform traditional finance (TradFi), it provides reduced fees, increased inclusivity, faster transactions, enhanced security, and improved accessibility, transparency, and programmability; it also eliminates intermediaries. For end users, DeFi presents asset custody options, peer-to-peer transactions, programmable control features, and innovative financial solutions. Despite its rapid growth in recent years, there is limited comprehensive research on mapping DeFi’s benefits and risks alongside its role as an enabling technology within the financial services sector. This research addresses these gaps by developing a DeFi classification system, organizing information, and clarifying connections among its various aspects. The research goal is to improve the understanding of DeFi in both academic and industrial circles to promote comprehension of DeFi taxonomy. This well-organized DeFi taxonomy aids experts, regulators, and decision-makers in making informed and strategic decisions, thereby fostering responsible integration into TradFi for effective risk management. This study enhances DeFi security by providing users with clear guidance on existing mechanisms and risks in DeFi, reducing susceptibility to misinformation, and promoting secure participation. Additionally, it offers an overview of DeFi’s role in shaping the future of the internet.https://www.mdpi.com/1999-5903/16/3/76blockchain technologydigital economydecentralized financefinancial institutionstraditional finance |
| spellingShingle | Andry Alamsyah Gede Natha Wijaya Kusuma Dian Puteri Ramadhani A Review on Decentralized Finance Ecosystems Future Internet blockchain technology digital economy decentralized finance financial institutions traditional finance |
| title | A Review on Decentralized Finance Ecosystems |
| title_full | A Review on Decentralized Finance Ecosystems |
| title_fullStr | A Review on Decentralized Finance Ecosystems |
| title_full_unstemmed | A Review on Decentralized Finance Ecosystems |
| title_short | A Review on Decentralized Finance Ecosystems |
| title_sort | review on decentralized finance ecosystems |
| topic | blockchain technology digital economy decentralized finance financial institutions traditional finance |
| url | https://www.mdpi.com/1999-5903/16/3/76 |
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