Decentralized exchanges: a study on the impact of security risks on the adoption of decentralized finance

Abstract

<strong>In recent years, the quick development of blockchain technology and cryptocurrencies had an impact on the financial industry by creating a new crypto economy. The upcoming generation of decentralized applications has appeared due to smart contracts. DEX’s provide many advantages in comparison to centralized exchanges. However, they also bring several security risks. In this paper the focus is on the impact of security risks on the trust in decentralized finance(DeFi) and DEX’s, and how security risks and trust impact DeFi adoption. This research discusses several security risks and conducts an empirical study(surveys) to measure the trust in DEX’s and DeFi. Additionally, secondary data is researched to form the empirical study and to better understand the research subjects. The results are that the security risks negatively impact the trust in DEX’s which negatively affects the adoption of DeFi.</strong>