Wharton School: DeFi Could Reshape the Global Financial System

DeFi has the potential to transform global finance, but today activity is more concentrated in leveraged trading and yield generation.

Researchers highlighted six main use cases for DeFi: stablecoins, decentralized exchanges, loans, derivatives, insurance, asset management and ‘ancillary services’ such as wallets and oracles.

DeFi could reduce frictions in market functioning and transactional costs in trading and the allocation of financial assets. Among other benefits are greater transparency, more control for stakeholders, improved access to markets and faster settlement times.

The authors also noted the sector’s vulnerabilities: fraud, regulatory uncertainty and the immaturity of the technology. The authors noted the potential threat of covert centralized control.

Cryptocurrency funds have shown growing interest in the DeFi sector, according to PwC’s latest advisory report.

DeFi Beyond the Hype by ForkLog on Scribd

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