Journal of Analytical and Applied Computer Sciences | Volume 1 Issue 1 | Pages: 6-10

Review Article

OPEN ACCESS | Published on : 31-Dec-2025

An Analytical Review - Decentralized Finance (DeFi) of Protocols, Risks, and Regulatory Challenges

V T R Pavan Kumar M
• Department of Computer Science, Kakaraparti Bhavanarayana College,Vijayawada-520001.

Shamim B
• Department of Computer Science, Kakaraparti Bhavanarayana College,Vijayawada-520001.


• V N R Sai Krishna Kari
• Department of Computer Science, Kakaraparti Bhavanarayana College,Vijayawada-520001.

Abstract

Decentralized Finance (DeFi) represents a paradigm shift in financial services by leveraging blockchain technology and smart contracts to provide open, permissionless, and trust-minimized alternatives to traditional financial systems. Over the past few years, DeFi has experienced rapid growth, enabling decentralized exchanges, lending platforms, stablecoins, and synthetic assets without centralized intermediaries. Despite its transformative potential, DeFi faces significant challenges related to security vulnerabilities, systemic risks, governance limitations, and regulatory uncertainty. This review paper provides a comprehensive analysis of DeFi protocols, examines key technical and economic risks, and critically evaluates emerging regulatory responses across jurisdictions. The paper further identifies open research gaps and future directions necessary for the sustainable development of decentralized financial ecosystems.

Keywords

Decentralized Finance, Blockchain, Smart Contracts, DeFi Risks, Financial Regulation, Cryptocurrencies

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