Decentralized Finance: On Blockchain- and Smart Contract-based Financial Markets

ArXiv ID: ssrn-3571335 “View on arXiv”

Authors: Unknown

Abstract

The term decentralized finance (DeFi) refers to an alternative financial infrastructure built on top of the Ethereum blockchain. DeFi uses smart contracts to cr

Keywords: Decentralized Finance (DeFi), Smart Contracts, Blockchain, Ethereum, Tokenomics, Crypto

Complexity vs Empirical Score

• Math Complexity: 2.5/10
• Empirical Rigor: 3.0/10
• Quadrant: Philosophers
• Why: The paper provides a conceptual framework and survey of DeFi architecture with minimal advanced mathematics, focusing on high-level descriptions rather than dense formulas. Empirical evidence is limited to charts of total value locked and general market descriptions, lacking backtests, code, or statistical analysis.

  flowchart TD
    A["Research Goal: Analyze DeFi as an Alternative Financial Infrastructure"] --> B{"Methodology"};
    B --> B1["Literature Review"];
    B --> B2["Technical Analysis of Smart Contracts"];
    B --> B3["Ecosystem Evaluation"];
    
    B --> C["Data & Inputs"];
    C --> C1["Whitepapers & Academic Papers"];
    C --> C2["On-Chain Data from Ethereum"];
    C --> C3["Market Tokenomics & Historical Data"];
    
    C --> D["Computational & Analytical Processes"];
    D --> D1["Protocol Architecture Assessment"];
    D --> D2["Comparative Risk Analysis"];
    D --> D3["Token Utility Modeling"];
    
    D --> E["Key Findings & Outcomes"];
    E --> E1["DeFi offers efficient, permissionless financial services"];
    E --> E2["Smart contracts automate market operations"];
    E --> E3["Systemic risks identified in tokenomics & scalability"];