# DeFi-ning DeFi: Challenges & Pathway

arXiv: https://arxiv.org/abs/2101.05589 · HTML: https://mlsanity.com/paper/2101.05589/

## Key facts

- Cited by 2 papers in the map (data through 14 Oct 2026).
- First posted on arXiv 14 Jan 2021.

## Built on by (most cited first, 2 of 2)

- [Detecting Anomalous Cryptocurrency Transactions: an AML/CFT Application of Machine Learning-based Forensics](https://mlsanity.com/paper/2206.04803/) (2022)
- [Slow is Fast! Dissecting Ethereum's Slow Liquidity Drain Scams](https://mlsanity.com/paper/2503.04850/) (2025)

## Abstract (arXiv)

The decentralized and trustless nature of cryptocurrencies and blockchain technology leads to a shift in the digital world. The possibility to execute small programs, called smart contracts, on cryptocurrencies like Ethereum opened doors to countless new applications. One particular exciting use case is decentralized finance (DeFi), which aims to revolutionize traditional financial services by founding them on a decentralized infrastructure. We show the potential of DeFi by analyzing its advantages compared to traditional finance. Additionally, we survey the state-of-the-art of DeFi products and categorize existing services. Since DeFi is still in its infancy, there are countless hurdles for mass adoption. We discuss the most prominent challenges and point out possible solutions. Finally, we analyze the economics behind DeFi products. By carefully analyzing the state-of-the-art and discussing current challenges, we give a perspective on how the DeFi space might develop in the near future.