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Decentralized Finance

In: The Financial Ecosystem

Author

Listed:
  • Satyajit Bose

    (Columbia University)

  • Guo Dong

    (Columbia University)

  • Anne Simpson

    (CalPERS)

Abstract

We describe the value of decentralized decision-making in the context of the assessment of systemic risks in the financial ecosystem and draw parallels to the lessons learned from the polycentric provision of local public goods. Greater resilience of the ecosystem requires methods of decentralized recruitment and quorum sensing, features that induce rapid optimization without centralized regulation in ecological systems. We describe the potential for recruitment and quorum sensing in two financial applications: securitization and thematic investing. Finally, we consider the potential and pitfalls presented by the use of blockchain and distributed ledgers to specific applications in sustainable finance, including prediction markets, distributed corporate governance, and trade finance.

Suggested Citation

  • Satyajit Bose & Guo Dong & Anne Simpson, 2019. "Decentralized Finance," Palgrave Studies in Impact Finance, in: The Financial Ecosystem, chapter 0, pages 283-310, Palgrave Macmillan.
    • Handle: RePEc:pal:psifcp:978-3-030-05624-7_12
    DOI: 10.1007/978-3-030-05624-7_12
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