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‘DeFi has unleashed a wave of innovation,’ says a U.S. Federal Bank paper

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University of Basel professor Fabian Schär argues that Ethereum’s decentralized finance sector “may lead to a paradigm shift in the financial industry.”

Ethereum’s booming decentralized finance (DeFi) sector has the potential to become a “truly open, transparent, and immutable” infrastructure that can result in a “paradigm shift in the financial industry,” according to a paper published by the Federal Reserve Bank of St. Louis earlier this week.

DeFi is the collective name for an intricately intertwined network of decentralized applications (DApps) and platforms based on Ethereum’s smart contracts. The main idea behind the ecosystem is to create a financial system where users themselves can lend, borrow, and bank funds without the need for intermediaries such as banks.

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