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An introduction to DeFi

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Geneva, July 2, 2021

What is DeFi, why it matters and what are the challenges ahead?

We have all heard stories about rapidly expanding DeFi, or Decentralised Finance, the blockchain-powered financial revolution that is defying traditional finance. Unknown two years ago, DeFi today “manages” around USD 60 billion. This is still a fraction of traditional markets, but large and relevant enough to attract both institutional and regulators attention.

This article aims to be an introduction to DeFi to the average reader. It provides an overview of the DeFi market structure and its key players. It also sheds light on a couple of issues that the nascent DeFi industry still must tackle to increase adoption, particularly from regulated institutions.

This paper starts with a foreword by Aave, a leading DeFi protocol, sharing perspectives on DeFi, financial institutions and regulation. Section I describes DeFi by looking at its history and key figures. Section II describes in further detail the different DeFi segments. Section III focuses on the competition vs Centralized Finance (CeFi), if any, and issues of scalability and incoming regulation.

You can download the report here.

Enjoy the read,
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