Decentralized Finance (DeFi) and the Democratization of Wealth: Promise or Illusion?

Abstract

Decentralized Finance (DeFi) categorizes a paradigm shift in currency systems, promising to popularize wealth by removing traditional intermediaries through blockchain-based peer-to-peer networks. This paper critically explores DeFi’s potential to foster economic inclusion and fairness, exploring both its groundbreaking possibilities and its limitations. While DeFi lowers traditional impediments to financial services and pleading to marginalized communities, systemic liabilities —such as technological risks, governing gaps, and the replication of existing disproportion —challenge its democratizing claims. Furthermore, the intentness of wealth among early adopters and ongoing security issues threaten to undermine DeFi’s resource resilience. By evaluating DeFi’s socio-technical scenery, regulatory framework, and broader economic ramification, the study argues that while DeFi offers significant possibilities, its promise of true wealth democratization remains fortuitous on comprehensive tectonic reforms rather than technological creation alone