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Breaking the chains of traditional finance: A taxonomy of decentralized finance business models

Author

Listed:
  • Max Beinke

    (Osnabrück University)

  • Jan Heinrich Beinke

    (Department Smart Enterprise Engineering, German Research Center for Artificial Intelligence)

  • Eduard Anton

    (Osnabrück University)

  • Frank Teuteberg

    (Osnabrück University)

Abstract

Recently, the looming bankruptcy of Credit Suisse, which ultimately led to its merger with UBS, has intensified the discussion surrounding the need for more transparent and democratic financial markets. Decentralized finance (DeFi) represents a departure from traditional financial intermediation by leveraging blockchain technology and smart contracts. Despite its growing importance, limited research has been conducted on the business models of DeFi services. This study aims to address this gap by examining the business models of various DeFi services, identifying key drivers of innovation, differentiation, and value creation. Using a rigorous taxonomy development framework, we identify 12 dimensions and 47 characteristics that operationalize business models in DeFi. Our findings contribute to a better understanding of the transformation of financial services through blockchain technology and provide valuable insights for DeFi entrepreneurs, investors, and policymakers.

Suggested Citation

  • Max Beinke & Jan Heinrich Beinke & Eduard Anton & Frank Teuteberg, 2024. "Breaking the chains of traditional finance: A taxonomy of decentralized finance business models," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-20, December.
    • Handle: RePEc:spr:elmark:v:34:y:2024:i:1:d:10.1007_s12525-024-00704-4
    DOI: 10.1007/s12525-024-00704-4
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    More about this item

    Keywords

    Decentralized finance; Blockchain; Business model; Taxonomy; Web3;
    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
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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