Decentralized finance

Sarah Palurovic and Jonas Gross

Chapter 15 in Elgar Encyclopedia of Cryptocurrencies, Blockchain and DLT, 2026, pp 75-82 from Edward Elgar Publishing

Abstract: Decentralized finance (DeFi) leverages blockchain technology to create a transparent, open-source, and non-custodial financial ecosystem, minimizing reliance on traditional financial intermediaries. Rooted in Bitcoin and expanded by Ethereum's smart contracts, DeFi democratizes financial services by providing services such as lending, borrowing, decentralized exchanges, and asset tokenization. While DeFi strives to address the perceived limitations of traditional finance, offering benefits like improved financial inclusion and lower costs, it also faces regulatory challenges, scrutiny, and centralization risks. This chapter further presents governance models and incentive structures that are pivotal in promoting user participation and protocol decentralization.

Keywords: Decentralized finance; DeFi; Smart contracts; Blockchain technology; Lending and borrowing platforms; Decentralized exchanges; DEXs; Asset tokenization (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035339952
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