DeFi: The Future of Finance?

Decentralised finance (DeFi) offers financial services through blockchains and smart contracts instead of central intermediaries such as banks.

DeFi vs traditional finance

Traditional finance is centralised and permissioned, and users trust institutions. DeFi is decentralised and largely permissionless, and users trust open-source code.

The building blocks

• Blockchains secured by proof of work or proof of stake
• Smart contract platforms such as Ethereum
• Stablecoins backed by fiat, crypto collateral or algorithms
• Decentralised applications that users interact with

Use cases

Lending and borrowing, decentralised exchanges and automated market makers, stablecoin payments, insurance and prediction markets.

Challenges and risks

Complexity, price volatility, smart contract vulnerabilities and evolving regulation mean users should understand the basics before participating.

Our Blockchain, Crypto & DeFi Advisory team helps institutions and founders design compliant, Shariah-aligned digital asset products.