Not logged in.
Quick Search - Contribution
Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Deciphering DeFi: A Comprehensive Analysis and Visualization of Risks in Decentralized Finance |
| Organization Unit | |
| Authors |
|
| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
|
| Journal Title | Journal of Risk and Financial Management |
| Publisher | MDPI Publishing |
| Geographical Reach | international |
| ISSN | 1911-8074 |
| Volume | 16 |
| Number | 10 |
| Page Range | 454 |
| Date | 2023 |
| Abstract Text | Decentralized finance (DeFi) promises a revolution in financial accessibility, transparency, and automation. Yet, its very novelty exposes participants to a number of additional risks and challenges. This study aims to address the risks associated with DeFi, while also conducting a comparative analysis to those of classical/traditional finance (TradFi). After introducing DeFi and its defining characteristics, such as the use of smart contracts, blockchain technology, and decentralized governance, the paper outlines the principal risks associated with DeFi. Drawing insights from an extensive literature review of 200 recent articles, of which 50 were thoroughly analyzed, the study compares risks of DeFi and TradFi, categorizing these into systematic and unsystematic risks. Furthermore, we introduce the ‘risk wheel’, an innovative tool tailored to understand and navigate the subtleties of DeFi risks, finding potential applications in risk assessment, management, and even education. This paper’s primary objective is to provide a detailed and impartial examination of the risks associated with DeFi and their comparison to traditional finance in order to assist stakeholders in making informed decisions and mitigating possible losses. |
| Free access at | DOI |
| Digital Object Identifier | 10.3390/jrfm16100454 |
| Other Identification Number | merlin-id:24201 |
| PDF File |
Download from ZORA
|
| Export |
BibTeX
EP3 XML (ZORA)
|
| Keywords | Decentralized finance; DeFi; Risk management; Literature review; Risk classification; Risk wheel |
| Additional Information | This article belongs to the Special Issue Mechanisms and Models of Risk Management. |