Next Generation Blockchain-Based Financial Services

Moncada, Roberto; Ferro, Enrico; Favenza, Alfredo; Freni, Pierluigi

This paper explores the transition towards a paradigm in which centralization and decentralization systems coexist in the provision of financial services. The blockchain technology application to the financial industry is giving birth to Decentralized Finance (DeFi). The transition is studied through a cross-chain analysis that allows to compare different blockchain ecosystems characterized by diverse evolution courses. The results show a path dependency linked to the first-mover advantage of the Ethereum blockchain. The analysis also highlights the emergence of new players that propose higher scalability opportunities (e.g., Eos, Tezos) and different design choices in terms of governance. This exploratory study also emphasizes the potential complementarity between the standard financial system and DeFi, discussing the main differences among the financial services provided on-chain and off-chain.