Chiu, Jonathan; Kahn, Charles M.; Koeppl, Thorsten V. - 2022 - Last updated: October 11, 2022
In this article, we use a simple stylized model of collateralized lending to analyze the value proposition and limitations of decentralized finance (DeFi). DeFi uses a decentralized ledger to run smart contracts that automatically enforce the terms of a lending contract and safeguard the...