An Efficient and Transparent Financial Transaction System using Decentralized Finance (DeFi) based on Blockchain Technology

Abstract

A cutting-edge financial innovation that poses a challenge to the existing centralised banking system is decentralised finance, or DeFi. DeFi enables the trend of peer-to-peer transactions which eliminates the charges that banks and other financial service providers levy on their services. Anyone with internet access can employ software that tracks and verifies financial transactions in distributed databases of finance to, trade, lend and borrow money. That is why the implementation of smart contracts allows DeFi to create more transparent, open, and harmonically integrated protocols for modern financial services.. Decentralisation carries the risk of undermining existing accountability frameworks as well as the effectiveness of current financial regulatory and enforcement mechanisms. Simultaneously, in decentralised financial services it can be seen that value chains, reconcentration occurs in a different (perhaps less regulated, less apparent, and less transparent) value chain component. The primary objective of DeFi, decentralisation, cannot be achieved without regulation; in fact, regulation is necessary for DeFi to function. The proposed paper presents an innovative framework for decentralised finance that successfully addresses significant issues in the current financial ecosystem such as transaction process inefficiencies, vulnerabilities in security, and prohibited accessibility. The proposed approach not only increases user confidence and privacy, but also guarantees that financial services are more accessible to marginalised populations by integrating cutting-edge cryptography techniques with creative governance strategies. The experimental investigations' results indicate that the suggested framework can be effectively established in banks to gain greater accessibility, better transparency, and more flexibility for the users.