Decentralized Finance (DeFi): Transformative Potential and Associated Risks

Francesca Carapella, Edward Dumas, Jacob Gerszten and Nathan Swem
Additional contact information
Edward Dumas: https://www.bostonfed.org/people/bank/edward-dumas.aspx
Nathan Swem: https://www.federalreserve.gov/econres/nathan-swem.htm

Policy Hub, 2022, vol. 2022, issue 14

Abstract: Financial services in the crypto finance world are provided by a combination of centralized finance (CeFi) organizations and decentralized finance (DeFi). CeFi's are roughly similar to traditional financial intermediaries, but DeFi seeks to provide services using smart contracts (computer code) rather than an intermediary. DeFi's unusual structure creates some interesting potential but also raises new risks in addition to those already inherent in blockchains and crypto finance. This paper reviews some of the opportunities and risks.

Keywords: Decentralized finance; blockchain; cryptocurrency; financial services; financial stability (search for similar items in EconPapers)
JEL-codes: D23 D26 G19 G23 G28 L14 L23 L86 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:a00068:96693

DOI: 10.29338/ph2022-14

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