While decentralized finance (DeFi) has the potential to emulate and, indeed, outperform existing financial systems, it remains a complex phenomenon yet to be extensively researched. To make the most of this potential, its practitioners must gain a rigorous understanding of its intricacies, as must information systems (IS) researchers.
Against this background, we carried out a multivocal literature review to capture the state of research in DeFi. Thereby, we (1) present a consolidating definition of DeFi as we (2) analyze, synthesize, and discuss the current state of knowledge in the field of DeFi. Furthermore, we (3) identify gaps in the literature and indicate future research directions in DeFi.
Even though our findings highlight several shortcomings in DeFi that have prevented its widespread adoption, our literature review shows a large consensus on DeFi’s many promising features and potential to complement the traditional financial system. To that end, we encourage further research to mitigate the current risks of DeFi, the payoff of which will be an enriched financial ecosystem.
Please read more about our research in our latest paper published in Electronic Markets.