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CEA legal | The Growing Importance of Decentralized Finance (De-Fi)

Decentralized finance (DeFi) is a term used to encompass a growing number of financial services provided on blockchain platforms (mainly Ethereum). The DeFi industry has been becoming increasingly attractive thanks to its appealing premise allowing transactions to be carried out between peers without financial intermediaries, such as banks. Instead, the transacting parties “trust” smart contracts, which are self-executing software codes performed on a public blockchain, and as such fully visible by anyone and transparent. The revolutionary potentialities are limitless because even governance protocols start being run on a public blockchain. The number of Decentralized Autonomous Organizations (DAOs), which are entities without a central organization exercising power and with provisions implanted on a blockchain, is expanding quickly, and now one US state (Wyoming) formally recognize them.

A “DeFi” environment ensures multiple benefits: there is no need to apply to open a bank account nor to be financially vetted, thus leaving no room for discrimination; in fact, the industry may be referred to as “Democratic Finance” too. Additionally, “DeFi” transactions are permissionless, meaning that a transaction can be completed without the approval of a third party, allegedly independent. That also brings a much higher degree of flexibility; inasmuch, parties can move assets easily and quickly.

The “DeFi” structure is a perfect fit for the lending industry, as it gives quick access to liquidity to borrowers without the need to fill out a pile of paperwork to be reviewed by loan officers and allows lenders to put their crypto assets to work without going through multiple layers of approvals. And this is even more interesting for companies that now can tap into several lending opportunities from all over the world.

Other increasingly popular financial activities run on “DeFi” platforms are trading between crypto holders without relying on brokerage firms to clear the trades and depositing crypto assets on saving accounts that generate much more generous returns than traditional options offered by commercial banks.

Overall, businesses operating on “DeFi” platforms are likely to outperform their competitors by cutting costs brought by intermediaries, reducing human errors, automating the procedures, and offering a better customer experience with a higher degree of transparency and security.


  • Michele Cea, Esq.Founding Member & Managing Attorney, CEA LEGAL P.C.
  • Email:, Phone: (212) 618 1644

Compliments of CEA Legal P.C. – a member of the EACCNY.