DeFi: Concepts and Ecosystem

TL;DR

This paper provides a comprehensive analysis of the DeFi ecosystem, highlighting its evolution, key concepts, participant roles, opportunities, and risks, with insights for sustainable development and regulation.

Contribution

It uniquely combines bibliometric and thematic analyses to map DeFi research trends, ecosystem components, and challenges, offering a holistic overview for stakeholders.

Findings

Research shifted from technological innovation to sustainability and regulation.

Key participants include developers, liquidity providers, auditors, and regulators.

Major risks involve smart contract vulnerabilities, liquidity issues, and regulatory uncertainties.

Abstract

This paper investigates the evolving landscape of decentralized finance (DeFi) by examining its foundational concepts, research trends, and ecosystem. A bibliometric analysis was conducted to identify thematic clusters and track the evolution of DeFi research. Additionally, a thematic review was performed to analyze the roles and interactions of key participants within the DeFi ecosystem, focusing on its opportunities and inherent risks. The bibliometric analysis identified a progression in research priorities, transitioning from an initial focus on technological innovation to addressing sustainability, environmental impacts, and regulatory challenges. Key thematic clusters include decentralization, smart contracts, tokenization, and sustainability concerns. The analysis of participants highlighted the roles of developers, liquidity providers, auditors, and regulators while identifying critical risks such as smart contract vulnerabilities, liquidity constraints, and regulatory uncertainties. The study underlines the transformative potential of DeFi to enhance financial inclusion and transparency while emphasizing the need for robust security frameworks and regulatory oversight to ensure long-term stability. This paper comprehensively explains the DeFi ecosystem by integrating bibliometric and thematic analyses. It offers valuable insights for researchers, practitioners, and policymakers, contributing to the ongoing discourse on the sustainable development and integration of DeFi into the global financial system.