Jeffery Sparks 
Decentralized finance (DeFi) has quickly grown in popularity since 2021. This disruptive new technology challenges centralized financial institutions such as banks and brokerage houses by using smart contracts on blockchain networks such as Ethereum.
This system removes the need for intermediaries, making it less expensive than conventional systems and faster and safer than them.
Decentralization
Decentralization has become an increasingly popular trend in the financial industry. It enables consumers and companies to bypass intermediaries like banks and brokers in favor of creating complex ecosystems run according to rules that make markets more efficient while mitigating risk.
DeFi has caught regulators and traditional banks by surprise, yet should they be concerned? Krungsri Research believes that DeFi’s rise provides traditional banks with an opportunity to expand and strengthen their offerings.
Increase liquidity for SMEs, facilitate trade within the African Continental Free Trade Agreement (AfCFTA), and promote financial inclusion are among its many benefits. Furthermore, blockchain can reduce transaction costs and accelerate processing times; but be wary as its use raises technology and liquidity risks.
Trust
Decentralized Finance (DeFi) seeks to disrupt the traditional financial industry by disintermediating middlemen and placing control back in users’ hands. DeFi utilizes blockchain technology for peer-to-peer lending, borrowing, and trading of digital assets without intermediary brokers or exchanges.
DeFi enthusiasts remain optimistic about its potential, while critics highlight its limitations for mainstream use. There are several key considerations when looking at this emerging technology that must be kept in mind when taking this into account.
First and foremost, digital banking requires high levels of trust to operate effectively. Furthermore, its infrastructure must be transparent, secure, scalable, easy to use and understand if successful; otherwise it risks becoming redundant quickly. Banks must remain adaptable as technological change occurs in order to remain successful.
Transparency
Decentralized finance (DeFi) is an emerging financial ecosystem comprised of public blockchain networks and cryptocurrencies that provides a transparent, open alternative to the conventional financial system while increasing efficiency of transactions.
Cryptocurrencies have become immensely popular through lending platforms that permit holders to loan large sums of money without credit checks or geographic limitations – an attractive solution for people who require access to capital quickly but do not have access.
But DeFi’s increasing popularity has raised security concerns for some users. They worry that hackers might attempt to break into its blockchains or that personal information could become vulnerable against cyber attackers; as a result, there has been calls for new regulations designed to safeguard users against these risks.
Security
Decentralized finance (DeFi) is an emerging field in which cryptocurrencies such as Bitcoin are being used for peer-to-peer financial transactions. DeFI’s foundation lies in providing secure record keeping and building trust between parties involved; modern DeFi can trace its roots back to Bitcoin which introduced an unpermissionless yet highly reliable method of record keeping.
DeFi is an alternative banking model that is global, peer-to-peer and pseudonymous; using Blockchain technology for transparent transactions. DeFi could eliminate many intermediaries and service fees; in addition to potentially lowering loan and asset trading costs. But its optimism should be balanced with caution: technological change can wreak havoc with human institutions that refuse to adapt quickly enough.
Regulation
Decentralised finance (DeFi) is an emerging technology that enables individuals to trade and borrow money without intermediaries. According to its supporters, DeFi is more transparent than existing systems and facilitates rapid transaction processing times while decreasing reliance on centrally stored data.
Regulators need to understand the effects of disruptive innovations on society. While current DeFi studies hold positive views about their potential, more critical research must be conducted to uncover any new risks or issues that might negatively impact society so as to make decisions that will benefit all involved parties. Furthermore, financial services industry participants need to take an active part in helping develop DeFi.
