A Short Survey on Business Models of Decentralized Finance (DeFi) Protocols



Teng Andrea Xu, Jiahua Xu


Decentralized Finance (DeFi) services are moving traditional financial operations to the Internet of Value (IOV) by exploiting smart contracts, distributed ledgers, and clever heterogeneous transactions among different protocols. The exponential increase of the Total Value Locked (TVL) in DeFi foreshadows a bright future for automated money transfers in a plethora of services. In this short survey paper, we describe the business model for different DeFi domains - namely, Protocols for Loanable Funds (PLFs), Decentralized Exchanges (DEXs), and Yield Aggregators. We claim that the current state of the literature is still unclear how to value thousands of different competitors (tokens) in DeFi. With this work, we abstract the general business model for different DeFi domains and compare them. Finally, we provide open research challenges that will involve heterogeneous domains such as economics, finance, and computer science.


Recommended SciCasts
Liquidations: DeFi on a Knife-edge
Quantum chemistry on quantum annealers
Spin-plasma waves
Introduction to ScienceCast
SoK: Yield Aggregators in DeFi
Cosmic Birefringence in 2022