TRANSFORMATION OF TRADITIONAL FINANCIAL INSTITUTIONS IN THE CONTEXT OF THE DEVELOPMENT OF DECENTRALIZED FINANCE (DEFI)

Abstract

This paper explores the transformation of traditional financial institutions under the impact of the development of decentralized finance (DeFi). It highlights how blockchain technology and DeFi are changing the way financial transactions are conducted, enabling transactions without traditional intermediaries such as banks. Key benefits, such as reduced transaction costs and increased accessibility to financial services, are discussed, while risks, including cryptocurrency volatility and smart contract vulnerabilities, are highlighted. Special attention is paid to the need for comprehensive legislation to protect market participants and maintain economic stability in the context of rapid development of decentralized finance.