DeFi and the Future of Finance

DeFi and the Future of Finance * Campbell R. Harvey Duke University, Durham, NC USA 27708 National Bureau of Economic Research, Cambridge MA USA 02138 Ashwin Ramachandran Dragonfly Capital Joey Santoro Fei Protocol ABSTRACT Our legacy financial infrastructure has both limited growth opportunities and contributed to the inequality of opportunities. Around the world, billion are unbanked. Small businesses, even those with a banking relationship, often must rely on high-cost financing, such as credit cards, because traditional banking excludes them from loan financing. High costs also impact retailers who lose 3% on every credit card sales transaction. These total costs for small businesses are enormous by any metric. The result is less investment and decreased economic growth. Decentralized Finance , or DeFi, poses a challenge to the current system and offers a number of potential solutions to the problems inherent in the traditional financial infrastructure.

4.2 Fungible Tokens 19 4.2.1 Equity Token 20 4.2.2 Utility Tokens 20 4.2.3 Governance Tokens 21 ... The earliest form of market exchange was peer to peer, also known as barter. Barter was highly inefficient because supply and demand had to be exactly matched ... Financial trading is largely done via intermediaries. Borrowing and lending is ...

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