Paper: arXiv 2304.01918
Authors: Mansur Bestas
Abstract
Decentralized finance, powered by blockchain technology, is growing day by day. This field, which emerged a few years ago, today manages $70 billion in assets. In this study, the concept of decentralized finance is discussed and explained the differences from traditional finance. Then, compliance with the legal regulations and the requirements to ensure compliance are mentioned. An evaluation has been made about the financial services offered by the decentralized finance field and the stock market and stablecoins that it uses as a tool while providing these services. Its economic effects, security and, privacy dimensions are examined. In the study, the differences between centralized and decentralized finance, which generally covers legal, economic, security, privacy, and market manipulation, are systematically analyzed. A structured methodology is presented to distinguish between centralized and decentralized financial services. Keywords: decentralized finance, FinTech, financial regulation, blockchain, distributed ledger technology.
Complexity vs Empirical Score
- Math Complexity: 1.5/10
- Empirical Rigor: 2.5/10
- Quadrant: Philosophers — conceptual discussion, limited math and data
Why this score: The paper provides a high-level conceptual overview comparing Decentralized Finance (DeFi) with traditional centralized finance across regulatory, economic, and security dimensions. It lacks quantitative modeling, formal mathematical derivations, and empirical data analysis or backtesting.
Research Flowchart
flowchart TD
A[Goal: Analyze DeFi vs. Traditional/Centralized Finance] --> B[Input: DeFi Assets, Legal Frameworks & Financial Services Data]
B --> C[Method: Systematic Comparative & Regulatory Analysis]
C --> D[Evaluate DeFi Services, Stablecoins & Security/Privacy Risks]
D --> E[Develop Structured Classification Framework for FinTech]
E --> F[Outcomes: Defined Legal Compliance Needs & Systematic CeFi vs. DeFi Comparison]