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DeFi: The Future of Finance?

We explain what you need to know about Decentralised Finance (‘DeFi’).

What is DeFi?

To its devotees, DeFi promises to democratise the provision of financial services through the use of smart contracts, cryptoassets and distributed ledger technology. To its detractors, DeFi presents a new battleground for ‘legitimate’ financial services firms against unregulated blockchain-fuelled impostors. While the reality will of course sit somewhere between these extremes, DeFi is forcing market players and regulators alike to reassess how financial services can, and should, be made available to consumers.

Against this backdrop, the following pages aim to provide the background to DeFi products and services, a comparison of DeFi against the more traditional ‘centralised’ finance (CeFi), and an overview of how regulators are so far grappling with this emerging industry.