A systematic review of decentralized finance protocols

Decentralized finance (DeFi) has revolutionized the financial industry in recent years. Industries such as banking, insurance, and investment are experiencing a significant shift due to the growth of DeFi. The decentralized finance market is expanding exponentially, emphasizing the potential of digital currencies and decentralized platforms in providing an alternative to the traditional finance paradigm. It eliminates the need for costly intermediaries, reduces transaction fees, and increases accessibility to financial services for everyone, regardless of their geographic location or economic status. With the enormous increase in cryptocurrency investment, individuals and institutions have started to use DeFi. In this context, understanding the architecture and working mechanisms of different DeFi protocols becomes crucial in creating new and innovative products. This review paper explores various DeFi protocols, including derivatives, decentralized exchanges (DEX), lending and borrowing, asset management, and stablecoins. It analyses their internal structure and composability, providing insights into how these protocols can be combined to create new and innovative DeFi products and explore the potential of DeFi in providing an alternative to the traditional finance paradigm.