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5 - Regulatory Considerations of the Decentralised Financial System

from Part II - Digital Assets and Decentralised Finance

Published online by Cambridge University Press:  06 March 2025

By
Ryosuke Ushida  and
Shin’ichiro Matsuo
Edited by
Reena Aggarwal  and
Paolo Tasca
Reena Aggarwal
Affiliation:
Georgetown University, Washington DC
Paolo Tasca
Affiliation:
University College London
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Summary

The ecosystem of decentralised finance (DeFi), which generally refers to a decentralised form of financial applications executed by smart contracts on a public blockchain, has been rapidly expanding since early 2020. In terms of total value locked (TVL), which represents the total value of tokens locked in a smart contract on blockchain such as Ethereum and is often used as an indicator of DeFi market size, it has increased more than 80 times since the beginning of 2020, to about $58 billion as of the end of May 2021. Many financial products are available without KYC (know your customers), including crypto-assets exchange, lending, derivatives, insurance, and decentralised stablecoins.

Type
Chapter
Information
Digital Assets
Pricing, Allocation and Regulation
 , pp. 87 - 103
Publisher: Cambridge University Press
Print publication year: 2025

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References

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Ushida, R. and Angel, J. (2021). Regulatory considerations on centralized aspects of DeFi managed by DAOs. In Financial Cryptography and Data Security. FC 2021 InternationalWorkshops, pages 21–36. Springer Berlin Heidelberg.CrossRefGoogle Scholar

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