Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Markets

  title={Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Markets},
  author={Fabian Sch{\"a}r},
This paper explores the Decentralized Finance (DeFi) ecosystem. We examine how DeFi is emerging on top of the public Ethereum smart contract platform, compare it to the centralized architecture of traditional financial markets and highlight opportunities and potential risks of this ecosystem. We propose a multi-layered framework to analyze the implicit architecture and the various DeFi building blocks, including token standards, decentralized exchanges, decentralized debt markets, blockchain… 

Figures and Tables from this paper

Decentralized Finance : The Possibilities of a Blockchain “Money Lego” System

  • T. Katona
  • Economics
    Financial and Economic Review
  • 2021
With the adoption of blockchain technology, initiatives to provide financial, investment and insurance services to a wide range of users in a decentralized manner have emerged. But can decentralized

Decentralized Finance (DeFi): Transformative Potential & Associated Risks

Decentralized finance (DeFi) refers to a set of newly emerging financial products and services that operate on decentralized platforms using blockchains to record and share data. DeFi products and

Agent-Based Modeling of Blockchain Decentralized Financial Protocols

This paper presents an agent-based modeling approach for decentralized exchanges that allowed them to achieve realistic results both in normal and stress market conditions and investigates the impact of front runners on the distribution of profits.

Decentralized finance could support a new financial infrastructure if challenges are overcome

Decentralized finance (DeFi) uses public blockchain networks to conduct transactions without having to rely on centralized service providers such as custodians, central clearinghouses, or escrow agents by using so-called smart contracts.

Transparent Distributed Investment in Digital Era Based on Blockchain Technology

In this article, this article tries to take a step towards the future of investment by examining blockchain technology and protocols like Betoken, Cook and d HEDGE and comparing their performance.

SoK: Decentralized Finance (DeFi)

A distinction between technical security and economic security is provided, connecting the latter with new models and thereby synthesizing insights from computer science, econom-ics and finance, and the open research challenges in the ecosystem across these security types are outlined.

Smart Contracts on the Blockchain – A Bibliometric Analysis and Review

This paper analyzes 468 articles on the topic of smart contracts, providing a summary and analysis of the current state of research on smart contracts and identifying intellectual structures and emerging trends, and derives starting points for future research.

The Blockchain Oracle Problem in Decentralized Finance—A Multivocal Approach

This research supports the view that the oracle problem in decentralized finance bears specific characteristics which require standardization and appropriate economic incentives to be addressed, and outlines the most promising ways to overcome the related weaknesses.

A Blockchain-Based Decentralized Microservices: Minimal Architecture for Accounting

This article will present a minimalist architecture based on the Blockchain to solve the traceability and authenticity of accounting data, internal and external operations between several entities, thus facilitating the government's audit and taxation procedure’s financial bodies.

DeDa: A DeFi-enabled Data Sharing and Trading System

This paper proposes an elastic data pricing scheme that can dynamically adjust data prices based on data usage and timing, and implements and integrates these critical components into a prototyping system deployed onto Ethereum.



The Tokenization of Assets: Using Blockchains for Equity Crowdfunding

This chapter proposes a categorization of token standards into UTXO-based, layer-based and smart contract-based tokens, and analyzes the advantages and drawbacks of tokenization including information asymmetries between investors and campaign creators, regulatory issues and high energy intensity of Proof-of-Work-secured Blockchains.


When Satoshi Nakamoto first set the Bitcoin blockchain into motion in January 2009, he was simultaneously introducing two radical and untested concepts. The first is the "bitcoin", a decentralized


  • Computer Science, Mathematics
  • 2017
The Melon protocol is a blockchain protocol for digital asset management on the Ethereum platform. It enables participants to set up, manage and invest in digital asset management strategies in an


The blockchain paradigm when coupled with cryptographically-secured transactions has demonstrated its utility through a number of projects, with Bitcoin being one of the most notable ones, and Ethereum implements this paradigm in a generalised manner.

A Short Introduction to the World of Cryptocurrencies

It is concluded that Bitcoin has a wide range of interesting applications and that cryptoassets are well suited to become an important asset class.

Smart Contracts

ZusammenfassungSmart Contracts sind rechtliche Vereinbarungen, die sich IT-Technologien bedienen, um die eigene Durchsetzbarkeit sicherzustellen. Es werden durch Smart Contracts autonom Handlungen

Augur: a decentralized oracle and prediction market platform

Augur is a trustless, decentralized oracle and platform for prediction markets that aims to ensure that honest, accurate reporting of outcomes is always the most profitable option for Reputation token holders.

Token Tracker

    The Idea of Smart Contracts

    • 1997

    Betoken Whitepaper: A Meritocratic Hedge Fund Built on Ethereum

    • 2018