Technology of Decentralized Finance

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* Working Paper: The Technology of Decentralized Finance (DeFi). By Raphael Auer, Bernhard Haslhofe. BIS Working Papers | No 1066 | 19 January 2023

URL = https://www.bis.org/publ/work1066.htm pdf

"This paper seeks to provide a comprehensive overview and classification of DeFi."


Summary

"Decentralised finance (DeFi) builds on distributed ledger technologies (DLT) to offer services such as trading, lending and investing without using a traditional centralised intermediary. The fact that DeFi components can be programmed may open up new possibilities for more competitive financial markets, and could bring efficiency gains. However, DeFi introduces enormous technological and economic complexity that makes it increasingly difficult to assess the risks and potential of DeFi financial products. But financial institutions and regulators dealing with DeFi need just such a systematic evaluation of these factors."

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