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A multivocal literature review of decentralized finance: Current knowledge and future research avenues

Author

Listed:
  • Vincent Gramlich

    (FIM Research Center, University of Bayreuth
    Branch Business & Information Systems Engineering, Fraunhofer Institute of Applied Information Technology FIT
    ditlab, Frankfurt University of Applied Sciences)

  • Tobias Guggenberger

    (FIM Research Center, University of Bayreuth
    Branch Business & Information Systems Engineering, Fraunhofer Institute of Applied Information Technology FIT)

  • Marc Principato

    (FIM Research Center, University of Bayreuth
    Branch Business & Information Systems Engineering, Fraunhofer Institute of Applied Information Technology FIT)

  • Benjamin Schellinger

    (FIM Research Center, University of Bayreuth
    Branch Business & Information Systems Engineering, Fraunhofer Institute of Applied Information Technology FIT)

  • Nils Urbach

    (FIM Research Center, University of Bayreuth
    Branch Business & Information Systems Engineering, Fraunhofer Institute of Applied Information Technology FIT
    ditlab, Frankfurt University of Applied Sciences)

Abstract

While decentralized finance (DeFi) has the potential to emulate and, indeed, outperform existing financial systems, it remains a complex phenomenon yet to be extensively researched. To make the most of this potential, its practitioners must gain a rigorous understanding of its intricacies, as must information systems (IS) researchers. Against this background, this study uses a multivocal literature review to capture the state of research in DeFi. Thereby, we (1) present a consolidating definition of DeFi as we (2) analyze, synthesize, and discuss the current state of knowledge in the field of DeFi. We do so while adapting the blockchain research framework proposed by (Risius and Spohrer, Business & Information Systems Engineering 59:385–409, 2017). Furthermore, we (3) identify gaps in the literature and indicate future research directions in DeFi. Even though our findings highlight several shortcomings in DeFi that have prevented its widespread adoption, our literature review shows a large consensus on DeFi’s many promising features and potential to complement the traditional financial system. To that end, this paper is presented to encourage further research to mitigate the current risks of DeFi, the payoff of which will be an enriched financial ecosystem.

Suggested Citation

  • Vincent Gramlich & Tobias Guggenberger & Marc Principato & Benjamin Schellinger & Nils Urbach, 2023. "A multivocal literature review of decentralized finance: Current knowledge and future research avenues," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-37, December.
    • Handle: RePEc:spr:elmark:v:33:y:2023:i:1:d:10.1007_s12525-023-00637-4
    DOI: 10.1007/s12525-023-00637-4
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Vincent Gramlich & Dennis Jelito & Johannes Sedlmeir, 2024. "Maximal extractable value: Current understanding, categorization, and open research questions," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-21, December.
    2. Eduard Hartwich & Alexander Rieger & Johannes Sedlmeir & Dominik Jurek & Gilbert Fridgen, 2023. "Machine economies," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-13, December.
    3. Erdong Chen & Mengzhong Ma & Zixin Nie, 2024. "Perpetual future contracts in centralized and decentralized exchanges: Mechanism and traders’ behavior," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-36, December.
    4. Mahmoud Bidry & Abdellah Ouaguid & Mohamed Hanine, 2023. "Enhancing E-Learning with Blockchain: Characteristics, Projects, and Emerging Trends," Future Internet, MDPI, vol. 15(9), pages 1-16, August.
    5. Shezon Saleem Mohammed Abdul & Anup Shrestha & Jianming Yong, 2024. "CrossDeFi: A Novel Cross-Chain Communication Protocol," Future Internet, MDPI, vol. 16(9), pages 1-33, August.
    6. Gülcihan Aydaner & H. Aydın Okuyan, 2024. "Decentralized finance: a comparative bibliometric analysis in the Scopus and WoS databases," Future Business Journal, Springer, vol. 10(1), pages 1-24, December.
    7. Christian Zeiß & Myriam Schaschek & Lisa Straub & Christoph Tomitza & Axel Winkelmann, 2024. "Re-intermediation of the crypto asset ecosystem by banks: An empirical study on acceptance drivers among the populace," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-24, December.
    8. Jan Schwiderowski & Asger Balle Pedersen & Jonas Kasper Jensen & Roman Beck, 2023. "Value creation and capture in decentralized finance markets: Non-fungible tokens as a class of digital assets," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-16, December.

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    More about this item

    Keywords

    Blockchain; Crypto Finance; DeFi; Literature review; Research agenda; Smart contracts;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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