Promising to enhance access and efficiency within financial services, Decentralized Finance (DeFi) has gained significant attention – and some traction in the marketplace – in recent years. In essence, DeFi uses secure distributed ledger/blockchain technology to facilitate peer-to-peer financial transactions, including borrowing, lending and trading.

This paper, in cooperation with ABC Research, aims to support practitioners in two ways: first, we offer an overview of DeFi, its promises and key foundational principles to provide a broad framework to support firms as they assess the DeFi phenomenon. Second, we deep dive into one of the most promising areas of DeFi – Decentralized Exchanges (DEX) and the perceived benefits of DEXs over the more liquid centralized exchanges on which the majority of digital assets are currently traded.