Decentralized Finance : The Possibilities of a Blockchain “Money Lego” System
Tamás János Katona
Abstract
With the adoption of blockchain technology, initiatives to provide financial, investment and insurance services to a wide range of users in a decentralized manner have emerged. But can decentralized finance be the alternative to the traditional financial system, or has it only created another "technology playground" for users who are biasedly enthusiastic about crypto-assets? The study examines the key definitions of decentralized finance and then synthesizes them to formulate a new, more complete definition. This is followed by a presentation of the different layers of decentralized finance and their prevalence, as well as an analysis of its benefits and risks. In the conclusions, the author finds that decentralized finance has the potential to provide financial services with an open, transparent and robust infrastructure, and has the possibility of reaching a broad range of users with its basic financial services. However, this requires further development of the sector and effective management of emerging risks.