Digital Assets and Decentralized Finance – Emerging Research Opportunities for Information Systems

This article explores the transformative impact of Decentralized Finance (DeFI) on the financial ecosystem and its implications for Information Systems. As global financial regulators adapt to the rise of DeFI, a decentralized blockchain network facilitates financial transactions through smart contracts, disrupting traditional intermediaries such as banks and exchanges. The decentralized nature of DeFI offers competitive, contestable, composable, and non-custodial financial ecosystems, presenting opportunities for efficiency and cost reduction. To architect DeFI solutions effectively, understanding the technology's layers and factors influencing adoption is crucial. The article introduces the Three-Layered DeFI Stack Reference (DSR) Model, emphasizing the Settlement Layer, DLT Application Layer, and DeFI Compositions. Architectural decisions involving permissioned or permissionless blockchains, database choices, trust considerations, and transaction interactions are explored. Considering the infancy of research on DeFI in Information Systems, the article proposes a research agenda. It categorizes potential research into the design and deployment of DeFI systems and the adoption and implications of these systems. The study also highlights the need for investigating the relationship between the extensiveness, evolvability, and enabling attributes of DeFI technology (3Es) and its real-world value, vision, and viability (3Vs). The research agenda aims to contribute to the understanding of DeFI's impact on information systems, offering exciting prospects for exploration in emerging and global markets.