Decentralized finance: technical architecture, operating mechanisms and governance

Abstract

Over the last few years, the advent of the DLT technology led to the spread of new business models within the financial market, which gave rise to two different applications. Initially, new distributed registers were used to create (at least apparently) ways of offering assets, such as so-called Initial Coin Offerings, and financial services in an innovative way, that is, more decentralized and without the intermediation of traditional intermediaries. More recently, these technologies, also as a result of the intervention of the regulator oriented towards the principle of technological neutrality, began to be employed to recreate a mere alternative to the traditional financial market both with reference to the supply of tokens – e.g. the supply of Securities Tokens Offering, and of services which continue to maintain centralization characteristics and still require the presence of an intermediary. Keywords: decentralized finance, distributed ledger technologies, smart contracts, disintermediation.