Lessons from the crypto winter – DeFi versus CeFi

This paper analyses the mechanisms involved in the recent failings in crypto-asset markets, focusing on events in 2022 through September.

The paper assesses the role of centralised finance (CeFi) and decentralised finance (DeFi), and the disproportionate impact the crypto market turmoil has had on retail market participants. It examines learnings of the recent crypto-asset market downturn, also know as the “crypto winter”, including high interconnectedness within the crypto-asset ecosystem; elaborate mechanisms of financial engineering that heavily use leverage and are built on the composability offered by DeFi (i.e., components of DeFi are pieced together to create new products); and increased market concentration.

The paper also highlights the urgency for policy action and provides policy recommendations.

DOWNLOAD THE STUDY HERE (PDF – 48 pages)

Laurent Leloup
– Fondateur et associé Finyear
– Fondateur et CEO Leloup Partners (Blockchain + IA – Stratégie, conseil, solutions)
– Auteur de Blockchain, la révolution de la confiance
"La blockchain n’est pas la révolution tant annoncée, elle n’est que l’outil d’un monde lui-même entré en révolution"
– Traducteur de La Blockchain pour les Nuls et de Au cœur du bitcoin.