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Systematic classification of literature items

Systematic classification of literature items

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Article
Full-text available
While Decentralized Finance (DeFi) has the potential to emulate and, indeed, outperform existing financial systems, it remains a complex phenomenon yet to be extensively researched. To make the most of this potential, its practitioners must gain a rigorous understanding of its intricacies, as must information systems (IS) researchers. Against this...

Citations

... Methodology Main findings or contributions Meyer (2022) Systematic literature review Synthesis of literature based on common micro, meso and macro levels categorization. Gramlich et al., (2023) systematic multivocal literature review (MLR) including academic and grey literature) ...
... This model didn't adapt to technology and globalization enough. It became interconnected with an obscure and complex chain of intermediaries (Gramlich et al., 2023;Nofer et al., 2017). Opposite to this, "DeFi eliminates the need for intermediaries by managing and automating complex financial flows through immutable protocols" (Eikmanns et al., 2023 p.1) . ...
Article
The purpose of this article is to study analysis the Decentralized Finance (DeFi) literature. By synthesizing the themes and theorical frameworks, we aim to identify knowledge gaps and potential areas for future research in the DeFi landscape. We conduct bibliometric and content analysis on a corpus of 275 articles extracted from the Web of Science and Scopus databases. We use the Bibliometrix package in R software to apply co-citation and bibliographic coupling. We find three research clusters (a) socioeconomic (b) technology and (c) financial with their conceptual structure, interactions and transformations. Applying both co-citation and bibliographic coupling network analysis yields a dynamic view of the field tracing thematic evolution from its inception to the present day, revealing a decline in academic interest in DeFi security vulnerabilities in contrast to the growing emphasis on social media's influence on DeFi prices.
... Following the high energy consumption the creator and author of Ethereum, has suggested that existing blockchains cannot achieve scalabilityovercome the capacity constraints described above -without sacrificing decentralization or security (Casey et al., 2018). The capacity constraints, and associated latency, of decentralized blockchains -in particular those employing proof-of-work consensus -make using them directly untenable for specific applications (Casey et al., 2018;Gramlich et al., 2023). The scalability of cryptocurrencies might be doubtful regarding the scarcity of the resource, as was mentioned earlier. ...
Article
This study examines the ongoing debate between Decentralized Finance (DeFi) and Centralized Finance (CeFi), analysing their unique advantages and challenges within the rapidly evolving financial landscape. The objective of this research is to argue for the convergence of DeFi and CeFi to create an innovative and secure financial ecosystem that balances accessibility with security, using Kazakhstan as a case study. The study employs comparative analysis and case-study methodology to explore Kazakhstan’s regulatory approach to digital assets. The focus is on understanding how licensing, anti-money laundering (AML) protocols, and consumer protection measures can support the integration of DeFi and CeFi. Primary data includes an analysis of Kazakhstan’s regulatory framework for digital assets, statistical data on AML implementation, and levels of consumer protection within the country. Findings indicate that a hybrid regulatory model effectively bridges the operational differences between DeFi and CeFi, fostering inclusivity and economic growth while safeguarding consumer interests. Kazakhstan’s regulatory focus on licensing and AML protocols illustrates that a balanced regulatory approach can accommodate both technological progress and necessary protections for financial participants. The study concludes that a convergence of DeFi and CeFi through a hybrid regulatory model can lay the foundation for a sustainable digital financial environment that is accessible, innovative, and secure. Future studies are encouraged to explore the role of emerging technologies, such as quantum computing, and examine the socio-economic impacts of DeFiCeFi integration on financial inclusivity for underserved populations.
... In the finance and banking sector, the known CMs are the ripple consensus algorithm or stellar consensus protocol. These are popular, by RCA, with fast settlement times and very low transaction fees [16,17]. Proof-of-authority (PoA), also known as a delegated proof-of-stake (DPoS), is the most common CM for validating transactions in supply chain and logistics, with guarantees like faster transactions, traceability, and high throughput [18][19][20]. ...
Article
Full-text available
In the past, blockchain technology has received much attention due to its unique properties and potential to transform various sectors, including education. As of today, the forgery of certificates is the most significant issue in the education sector, posing severe challenges for academic institutions, employers, and individuals seeking genuine qualifications. It proposes an Ethereum blockchain-based certificate notarization and verification framework to overcome the cited challenges. This work introduces the consensus mechanism for the education sector, known as EduCM, which will be based on the proof-of-authority (PoA) consensus model within the proposed BT-CNV framework. The work introduces a user registration approach, a certificate notarization approach, and a certificate verification approach within the proposed BT-CNV framework. These processes rely on combining decentralized storage using IPFS and the power of blockchain technology to guarantee security and integrity and provide verifiability for educational certificates. In this framework, the Elliptic Curve Digital Signature Algorithm is used for digitally signing and verifying peer-to-peer network transactions, the SHA-256 algorithm serves as the cryptographic hashing function, IPFS provides decentralized storage services, and EduCM is used to validate network transactions. In the Remix IDE, MetaMask wallet, and Sepolia test network, we implemented the BT-CNV framework. Experiments were conducted to evaluate BlockSim simulation toolkit performance measurements of throughput, latency, response time, and standard deviation metrics. The proposed BT-CNV framework realizes an average throughput of 319.36 TPS, a latency of 44.1 milliseconds, a response time of 85.5 milliseconds, and a standard deviation of 81.7 milliseconds. We make a security analysis of the BT-CNV framework, compare the features of the proposed EduCM with past proposals, and find that the new features offered by the proposed BT-CNV framework enhance the security capabilities. This work also highlights the positive impacts, implications, and societal contributions of this proposed BT-CNV framework on the broader community. This initiative will positively impact the issue of fraudulent credentials and certificate forgery.
... Recently, a different model emerged to tackle trust issues in the financial market paradigm, namely, decentralized finance (DeFi) (Gramlich et al., 2023). These new systems mainly use peer-to-peer (P2P) transactions where two parties interact with each other, involving no trusted intermediary but instead leveraging a blockchain that publicly discloses and validates transactions (Nakamoto, 2008). ...
Chapter
In the course of the digital transformation, increasing amounts of data are exchanged digitally. Business processes and regulatory compliance requirements that demand additional degrees of verifiability of the exchanged information and the accountability of corresponding stakeholders further add to the volume and sensitivity of this data. At the same time, users’ personal information calls for enhanced protection and organizations are concerned about ensuring the confidentiality of business-relevant information, as well as complying with data protection obligations. Thus, the tension between verifiability and accountability on the one hand and data minimization on the other hand has become a major concern. Maybe counterintuitively, decentralization technologies can exacerbate this issue, because they expand the number of stakeholders responsible for data processing and storage, which may increase verifiability/accountability and data minimization requirements at the same time. Privacy-enhancing technologies (PETs) provide a means to mitigate this seemingly fundamental trade-off. In this chapter, we give an overview of the technical foundations of PETs and reflect on how to leverage them in decentralized information systems to achieve verifiable and accountable results without disclosing excessive information. We particularly focus on zero-knowledge proof (ZKP)-based constructions.
... Often considered as important as the emergence of the Internet, the revolutionary launch of Bitcoin in 2009 and the subsequent spread of blockchain and distributed ledger technology (DLT) in the form of cryptocurrencies and decentralized applications (DApps) finally heralded a paradigm shift toward the decentralization of financial services (Gramlich et al., 2023). This "wild west" phase of cryptocurrencies and other crypto-assets facilitated by permissionless blockchains was initially characterized by rapid growth and minimal regulation (Barbereau et al., 2023b). ...
Chapter
This chapter first gives a brief overview of the evolution of the financial sector, highlighting key milestones such as the introduction of automated teller machines (ATMs), the rise of online and mobile banking, and the impact of FinTech innovations and open banking regulations. It then explores the paradigm shift initiated by Bitcoin and blockchain technologies toward decentralized financial services. The subsequent discussion of potential benefits and challenges of adopting decentralization technologies underscores the dynamic interplay between technological advancements and financial services. As such, the chapter sets the stage for a deeper exploration of the impact of decentralization technologies on the financial sector.
... Related work on retail CBDCs is situated in the wave of fascination for devising an electronic version of cash that originated after the launch of Bitcoin and the decrease in the use of cash in some jurisdictions (Zamora-Pérez, 2022). Meanwhile, the development of cryptocurrencies and smart contract platforms, which further expand the opportunities of applications in DeFi (Gramlich et al., 2023), e.g., in the form of stablecoins (Ante et al., 2021), further stimulated corresponding institutional projects. ...
Chapter
Over the past 10 years, private and public actors have been experimenting with the application of blockchain and distributed ledger technologies (DLTs) in the financial sector. In particular, central banks have explored different approaches toward the issuance of digital versions of cash – i.e., retail central bank digital currencies (CBDCs) – and toward improving interinstitutional transfers and settlements – i.e., wholesale CBDC systems. These projects put forward challenging techno-regulatory questions related to the associated system architecture to meet end user and institutional demands. This includes compliance with data protection rules and financial integrity safeguards, such as anti-money laundering (AML) and counter terrorist financing (CFT). Often, these goals seem conflicting, so CBDC models require a careful design of the corresponding technology stack. We argue how supplementary cryptographic components, such as decentralized digital identities and zero-knowledge proofs (ZKPs), can support both centralized and decentralized deployments of CBDCs. Accordingly, this chapter explores the techno-regulatory building blocks of CBDC designs and outlines different design choices that have been discussed, therefore challenging the narrative that necessarily associates decentralization with disintermediation.
... Recently, we have also witnessed the occurrence of a particular niche of the FinTech industry, namely decentralized finance (DeFi). Basically, DeFi is an emerging technology that "reshapes" financial services based on secure distributed ledgers similar to those used by cryptocurriences (Gramlich et al., 2023;Zetzsche et al., 2020). DeFi allows users to perform financial transactions or peer-to-peer digital exchanges (e.g., transfers, lending, savings, investing, and trading) without the presence of an intermediary entity (e.g., banks and brokerages), thereby eliminating the fees that an intermediary entity charges for using its services. ...
Preprint
Full-text available
Nowadays, the global booming of FinTech can be seen everywhere. FinTech has created innovative disruptions to traditional, long-established financial institutions (e.g., banks and insurance companies) in financial services markets. Despite of its popularity, there are many different definitions of FinTech. This problem occurs because many existing studies only focus on a particular aspect of FinTech without a comprehensive and in-depth analysis. This problem will hinder further development and industrial application of FinTech. In view of this problem, we perform a narrative review involving over 100 relevant studies or reports, with a view to developing a FinTech clustering framework for providing a more comprehensive and holistic view of FinTech. Furthermore, we use an Indian FinTech firm to illustrate how to apply our clustering framework for analysis.
... Identifying the relevant keywords to search on bibliometric databases is a major challenge in systematic literature review-based studies [24]. The present study adopts the keywords from similar studies on the topic under investigation e.g., [25], [10]. To prevent the exclusion of relevant articles, authors separate the keywords into two categories following the recommendations of [26]. ...
... Following the advent of bitcoin and the corresponding blockchain technology in 2009 (Nakamoto, 2009), a new form of electronic markets has emerged. The system of blockchain-based financial applications-also known as decentralized finance (DeFi) (Gramlich et al., 2023)-has at times exceeded $ 180 B in total value locked (DeFiLlama, 2024). While blockchain ledgers are by design decentralized and transparent, a closer look reveals that there are nevertheless many natural appearances of power and information asymmetries . ...
... In particular, smart contracts allow the generalization of tradable assets from units of the native cryptocurrency underlying public permissionless blockchains' consensus mechanisms to "tokens," i.e., any objects obeying customizable rules as long as they allow for the digital representation of ownership relations on a blockchain (Sunyaev et al., 2021;Hartwich et al., 2022). Corresponding decentralized applications (DApps) (Bünz et al., 2020;Sariboz et al., 2022;Spain et al., 2020;Varun et al., 2022;Kursawe, 2021) have already created an alternative financial ecosystem called decentralized finance (DeFi) that makes traditional financial services possible without established trusted intermediaries (Qin et al., 2022;Gramlich et al., 2023;Govindarajan et al., 2022). One widely used application of smart contracts are decentralized exchanges (DEXes), which allow trading tokens without a trusted intermediary. ...
... In cases where the collateral is not sufficient anymore due to price fluctuations and lenders fail to top their deposits up in time, the collateral is offered to arbitrageurs at a (often substantial) discount in what is called liquidations. Consequently, Oracles have frequently been targeted for exploiting lending platforms, either by triggering liquidations or enabling effective undercollateralization (Gramlich et al., 2023). To do so, attackers often leverage "FlashLoans"-uncollateralized, potentially massive (often worth millions of USD) loans that must be paid back within the very transaction where they are taken to drastically increase the amount of capital they can leverage for their attack . ...
Article
Full-text available
In traditional financial markets, front-running is a well-structured phenomenon. It represents a form of privileged actors utilizing knowledge or power advantages to extract undue profit at the cost of other stakeholders. Various mitigation strategies have emerged, ranging from market design to regulatory measures. More recently, a similar and substantially richer variety of means to gain unethical profit from power asymmetries has appeared in the context of blockchain-based decentralized applications. This phenomenon is called “maximal extractable value” (MEV). Despite the decentralized nature and inherent transparency of blockchain ledgers, MEV is particularly prevalent and challenging to mitigate. While related work in computer science and algorithmic game theory has already identified several different ways in which MEV manifests in decentralized finance (DeFi) and outlined partial solution approaches, a discussion of its impacts in the information systems (IS) domain is still absent. A holistic definition of MEV and how it can be exploited is necessary for the discussion of its potential implications for blockchain-based IS for businesses and public institutions. This paper conducts a systematic literature review to close this gap. It consolidates the diverging definitions of MEV and provides a categorization of the different ways in which it can manifest. As such, we synthesize and review the existing state of knowledge on MEV and point to undiscovered areas relevant to decentralized electronic markets in the form of a research agenda.
... A financial system that offers services and products with low transaction costs, high returns, and transparency (Gramlich et al. 2023) -at first glance, it sounds like an ideal situation. But is it? ...
... With the advent of DeFi, the formerly very powerful intermediaries, e.g., FSP, typical of the underlying blockchain technology and its pure peer-to-peer communication, have no longer been part of the system . Banks were becoming considerably less influential, losing their customers and money (Gramlich et al. 2023). However, due to re-intermediation, DeFi is now softening, and new FSP are gathering in the DeFi ecosystem where technology eliminated the old players (Chen & Bellavitis 2020). ...
... The Fifth Anti-Money Laundering Directive (5AMLD) in the European Union mandates financial institutions to evaluate the risks linked with crypto assets and establish suitable measures to alleviate those threats (European Union 2018). As crypto assets are a novel asset class with new and different risks (Gramlich et al. 2023, Ferreira & Sandner 2021, the application of quantitative methods used in traditional finance should be explored when measuring crypto asset risks (I2, I3, I4, I5). We consider VaR, Monte Carlo simulations, and Economic Capital Models to be appropriate methods (I1-I5). ...
Conference Paper
Full-text available
The emergence of decentralized finance and crypto assets has fundamentally changed the financial world and offers new potential to private investors and financial service providers. Despite the benefits, it is essential to face the risks. While initial regulation is already in place for risk management, financial service providers are often left to implement these measures on their own. This paper aims to identify the requirements for crypto assets risk management for financial service providers that go beyond implementing individual regulations. Guided by our research approach, we derive requirements from an academic and practical knowledge base. Accordingly, we evaluate the final requirements with a mixed-methods approach to receive feedback from portfolio managers, financial advisors, and blockchain experts. Finally, we will provide a comprehensive framework for financial service providers to effectively manage and mitigate crypto asset risks.