# Decentralized Finance (DeFi)
Defi is a broad category of [smart contracts](smart-contracts.md) which loosely correspond to digital investment schemes running on a [blockchain](blockchain.md) which allow users to create [overcollateralized](collateralization.md) loans out of [stablecoin](stablecoin.md) and which have side payouts in so-called "[governance tokens](governance-token.md)".

DeFi generally refers to a collection of services which offer lending products offered by non-banks and which exist outside the regulatory perimeter as a form [regulatory arbitrage](regulatory-arbitrage.md) and to fund margin trading activities to [speculaate](speculation.md) on [crypto assets](cryptoasset.md).

See also [yield farming](yield-farming.md), [AMM](amm.md), [DEX](dex.md) and [shadow bank](shadow-bank.md).

## References
1. Allen, Hilary J. 2022. ‘DeFi: Shadow Banking 2.0?’ William & Mary Law Review, Forthcoming.
1. Walch, Angela. 2019. ‘Deconstructing ‘Decentralization’: Exploring the Core Claim of Crypto Systems’. C. Brummer (Ed.), Crypto Assets: Legal and Monetary Perspectives, 1–36. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3326244.
1. Anker-Sørensen, Linn, and Dirk A Zetzsche. 2021. ‘From Centralized to Decentralized Finance: The Issue Of’. Available at SSRN 3978815. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3978815.
1. Aramonte, Sirio, Wenqian Huang, and Andreas Schrimpf. 2021. ‘DeFi Risks and the Decentralisation Illusion’, 16.
1. Barbereau, Tom, Reilly Smethurst, Orestis Papageorgiou, Alexander Rieger, and Gilbert Fridgen. 2022. ‘DeFi, Not So Decentralized: The Measured Distribution of Voting Rights’. In Proceedings of the 55th Hawaii International Conference on System Sciences. https://scholarspace.manoa.hawaii.edu/handle/10125/80074.
1. Barbereau, Tom, Reilly Smethurst, Orestis Papageorgiou, Johannes Sedlmeir, and Gilbert Fridgen. 2022. ‘Decentralised Finance’s Unregulated Governance: Minority Rule in the Digital Wild West’. Available at SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4001891.
1. Brennecke, Martin, Benjamin Schellinger, Nils Urbach, and Tobias Guggenberger. 2022. ‘The De-Central Bank in Decentralized Finance: A Case Study of MakerDAO’. In 55th Hawaii International Conference on System Sciences (2022). https://doi.org/10.24251/HICSS.2022.737.
1. Chen, Yan, and Cristiano Bellavitis. 2020. ‘Blockchain Disruption and Decentralized Finance: The Rise of Decentralized Business Models’. Journal of Business Venturing Insights 13. https://doi.org/10.1016/j.jbvi.2019.e00151.
1. Ciriello, Raffaele Fabio. 2021. ‘Tokenized Index Funds: A Blockchain-Based Concept and a Multidisciplinary Research Framework’. International Journal of Information Management 61: 102400. https://doi.org/10.1016/j.ijinfomgt.2021.102400.
1. Eikmanns, Benedikt C., Pascal Mehrwald, Isabell M. Welpe, and Philipp G. Sandner. n.d. ‘Is Ethereum the New IOS? Exploring the Platform Economy of Decentralized Finance’. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3992625.
1. Harwick, Cameron, and James Caton. 2020. ‘What’s Holding Back Blockchain Finance? On the Possibility of Decentralized Autonomous Finance’. Quarterly Review of Economics and Finance, October. https://doi.org/10.1016/j.qref.2020.09.006.
1. Johnson, Kristin N. 2021. ‘Decentralized Finance: Regulating Cryptocurrency Exchanges’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3831439.
1. Maia, Guilherme, and João Vieira dos Santos. 2021. ‘MiCA and DeFi (“Proposal for a Regulation on Market in Crypto-Assets” and ’Decentralised Finance’)’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3875355.
1. Nedashkovskiy, Alexander. 2021. ‘Understanding DeFi Ecosystem and How Can It Change or Transform Existing Financial System’. https://lutpub.lut.fi/handle/10024/162989.
1. Qin, Kaihua, Liyi Zhou, Yaroslav Afonin, Ludovico Lazzaretti, and Arthur Gervais. 2021. ‘CeFi vs. DeFi – Comparing Centralized to Decentralized Finance’. ArXiv Preprint ArXiv:2106.08157. http://arxiv.org/abs/2106.08157.
1. Saengchote, Kanis. 2021. ‘A DeFi Bank Run: Iron Finance, IRON Stablecoin, and the Fall of TITAN’. IRON Stablecoin, and the Fall of TITAN (July 16, 2021).
1. Schär, Fabian. 2021. ‘Decentralized Finance: On Blockchain-and Smart Contract-Based Financial Markets’. Federal Reserve Bank of St. Louis Review 103 (2): 153–74. https://doi.org/10.20955/r.103.153-74.
1. Sun, Xiaotong. 2021. ‘Centralized Governance in Decentralized Finance (DeFi): A Case Study of MakerDAO’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3971791.
1. Zetzsche, Dirk A., Douglas W. Arner, and Ross P. Buckley. 2020. ‘Decentralized Finance’. Journal of Financial Regulation 6 (2): 172–203. https://doi.org/10.1093/jfr/fjaa010.