Transformation in Financial Markets: The Rise of DeFi and Corporate Implications
Chapter from the book: Yürük, M. F. & Buğan, M. F. (eds.) 2023. Evolution of Financial Markets- III.

Güneş Topçu
Çanakkale Onsekiz Mart University

Synopsis

The shortcomings of financial markets have highlighted the necessity of central financial intermediaries, which have successfully met the needs of their clients. However, high fees are still incurred for certain services, such as cross-border money transfers. Additionally, our rapidly changing era requires new, efficient applications and business models, which existing institutions may not fully address. Especially with the acceleration of the transition to digitalization, driven by COVID-19, financial markets have undergone rapid transformations. Web3 components like cryptocurrencies, artificial intelligence, and blockchain have brought about significant changes in financial markets and have enabled the development of decentralized financial ecosystems. These technological advancements have provided greater access to financial services and increased competition. DeFi, short for Decentralized Finance, offers numerous advantages over traditional centralized finance. Institutional DeFi entails the utilization of products created within the DeFi ecosystem within financial institutions, necessitating these institutions to acquire the necessary technological infrastructure to adapt to this trend. DeFi allows companies to tokenize their assets, integrate them into this ecosystem, and conduct financial transactions on a decentralized platform. This results in faster, cost-effective transactions and increased liquidity in the markets. The purpose of this study is to explain the concept of DeFi and how it can be implemented in the business world. Within this context, we will discuss the potential advantages of DeFi for companies, implementation steps, and the factors that financial institutions should consider to successfully navigate this transformation. Furthermore, we will examine the risks that may arise during the corporate adoption of DeFi and strategies to effectively manage these risks.

How to cite this book

Topçu, G. (2023). Transformation in Financial Markets: The Rise of DeFi and Corporate Implications. In: Yürük, M. F. & Buğan, M. F. (eds.), Evolution of Financial Markets- III. Özgür Publications. DOI: https://doi.org/10.58830/ozgur.pub147.c1234

License

Published

October 21, 2023

DOI