BIS: Cryptocurrencies and DeFi

This BIS working paper discusses the different ways in which security of transactions is achieved under different protocols of the blockchain technology on which DeFi is based and provides an overview of the current crypto landscape and the main DeFi applications. The DeFi architecture is compared to traditional financial market solutions and the paper considers how these two regimes solve some of the most important problems in financial systems, such as data privacy and transparency, transactions costs, governance issues and systemic risk.