DeFi can “change global finance”


The Wharton School of the University of Pennsylvania has always been regarded as one of the best business courses in the United States and is the oldest university business school in the world. Wharton’s contributors detailed the ins and outs of DeFi in a new “Blockchain and Digital Asset Project” report titled “DeFi Beyond Hype” and concluded that DeFi has “change the world”. The potential of finance”.

DeFi Beyond the Hype: An Overview

This Wharton ReportIn collaboration with the World Economic Forum, it provides an excellent high-level overview of the current DeFi outlook. On the first page of the twenty-page summary, the team admitted that although the growth of DeFi services has surged from under $1B in 2019 to $80B today, we know that DeFi is still in the “mature stage.”

Wharton collaborators led by Professor Kevin Werbach divided DeFi services into six different islands: stablecoins, exchanges, credit, derivatives, insurance and asset management. The report continues to delve into each island and how DeFi operates within it, while still admitting that sometimes the lines between them can become blurred. Werbach and his team gave a comprehensive overview of all the key parts of the DeFi machine (wallets, Oracle, digital assets, etc.).

The team also outlined the four “defining characteristics” of DeFi: participation in financial services, operations and settlements that minimize trust (ie, public permissionless blockchain integration), non-custodial design, and open, programmable and composable Architecture.

Related Reading| Top 10 DeFi projects in the second quarter of 2021

Processing details

The report took time to resolve the details that make DeFi so desirable in some ways, such as governance tokens and other incentives that drive liquidity. It also discusses the costs and benefits of such decentralization, and outlines the fine line between centralized governance, partial decentralized governance, and decentralized governance.

In addition, the report also outlines the opportunities and challenges in DeFi, albeit somewhat biased. The opportunities are huge, including reducing friction and transaction costs, improving accountability, improving market access, and the inclusiveness of financial services. However, they are not without inherent challenges, such as throughput, cross-blockchain (and traditional services) operability, regulatory issues (especially in the current situation), and so on.

Ethereum has been a focal point in the DeFi landscape. | Source: ETH-USD on TradingView.com

That’s the packaging of the Wharton School

The detailed report summarizes the comprehensive content of DeFi into 20 pages. However, in addition to simply providing a broad vision of what DeFi is, the Wharton team also took time to resolve issues such as agreements such as Uniswap and SushiSwap, and asset pool agreements such as Compound and AAVE.

The Wharton School of Business (and more and more academic institutions) will continue to showcase and share views on the development of DeFi and blockchain technology. As the report aptly pointed out, “Various tools are emerging to simplify the user experience on and across DeFi services.”

Finally, the report concludes: “The success of DeFi depends on whether it can fulfill its commitment to open, minimally trusted and non-custodial but still trustworthy financial services.” It is safe to say that many people believe that DeFi can achieve this goal well.

Related Reading| DeFi is about to undergo a fundamental shift

Featured image from Pixabay, Charts from TradingView.com



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