Abstract

Decentralised Finance or DeFi has emerged as a transformative and disruptive force within the financial industry, offering innovative financial services powered by blockchain technology and smart contracts. This paper provides in-depth knowledge of DeFi, its evolution, applications, and their adoption. It identifies the opportunities brought about by DeFi, comparing it with the traditional CeFi (Centralized Financial) system, including financial inclusion, transparency, and programmable money. It highlights the potential of applications of DeFi for decentralized lending, decentralized exchanges, and yield farming as innovative and promising avenues within the DeFi space. A SWOT analysis comparing DeFi and CeFi was performed to delve into the strengths, weaknesses, opportunities, and threats associated with DeFi. This study explored the intricate challenges and inherent risks involved in the adoption of DeFi applications, offering insights into the hype, fear, and apprehensions among governments and the masses regarding its adoption. The findings offer a nuanced understanding of the current state of DeFi, providing valuable insights for researchers, policymakers, and industry practitioners.