DeFi: an overview of use cases and a status quo analysis of the ecosystem

Abstract

Decentralized finance (DeFi) is an emerging alternative financial infrastructure to the existing centralized financial system built on top of public and permissionless blockchains. In the last year, DeFi has grown rapidly and is considered one of the hot topics in blockchain. It may offer promising solutions to the key problems inherent in the existing financial system: inefficiency, limited access, opacity, centralized control, and the lack of interoperability. To examine the existing DeFi ecosystem, this paper gives an overview of the current status quo by exploring the existing applications and evaluates the benefits and risks in order to draw a comprehensive picture. Additionally, this paper gives an outlook on DeFi’s potential impact on the existing financial system, opportunities for collaboration, and the hurdles it is facing for widespread adoption.