Decentralized Finance (DeFi): Reinventing Financial Services

Abstract

The global financial system consists of many institutions, such as banks, insurance companies, stock exchanges, and various governmental agencies that regulate these institutions. The traditional finance service is centralized. Central authorities issue the currency and control the supply and distribution of money that fuels the economy. Centralized financial institutions manage the assets and carry out transactions through the centralized system to reduce fraud. However, these processes also increase complexity within the system and lead to high intermediary costs as well as slow transaction times. In addition, these transactions are not fully transparent to all parties involved.