Decentralised Finance: Opportunities, Risks And Legal Challenges

Decentralised Finance (DeFi) is without question a rapidly evolving area at the intersection of blockchain technology, crypto assets and traditional financial services.

In one year alone, the value of crypto assets locked in DeFi smart contracts grew from USD 670m at the beginning of 2019 to USD 13bln at the end of 2020. Despite these numbers, compared to the traditional financial markets DeFi is still in its infancy.

What is DeFi?

Intermediaries like agents and brokers of trust, liquidity, settlement and security have always played a major role in financial markets. But using and trusting intermediaries also comes with many shortcomings in the infrastructure of traditional financial markets. These include slow settlement cycles, liquidity challenges and lack of assurance around underlying assets. Now, DeFi is trying to rethink the traditional financial markets by leveraging blockchain technology to facilitate alternatives to central intermediaries and market