DEFI: a tool for digital transformation of the state

Keywords: DeFi, governance, e-government, blockchain

Abstract

DeFi is growing in popularity, and the active participation of users in the development of financial solutions determines the success of this ecosystem. The article discusses the key role of DeFi (decentralized finance) in the digital transformation of the state and its impact on global finance. Differences in prevalence and regulation in different countries indicate the need to adapt to different legal environments and financial systems. The author highlights the need for standardization in the context of diversity of approaches and lack of common terminology, which creates challenges for regulation. It is noted that DeFi opens up opportunities for creating more transparent, efficient and accessible financial systems. DeFi, as an innovative industry of digital transformation, has an impressive set of advantages, including decentralization, transparency, and low fees. It is noted that the implementation of decentralized financial solutions of DeFi poses significant challenges to the traditional legal system, including jurisdiction, law enforcement and data protection. The author emphasizes the need for a new legal approach and regulatory mechanisms to address the unique challenges posed by DeFi. The purpose of the study is to analyze the possibilities and prospects of using DeFi for the digital transformation of the state and government. The objectives of the study include analyzing the dynamics of DeFi implementation in public administration, studying the functional features and benefits of this process, studying the factors of investment attractiveness of DeFi, as well as justifying the feasibility of implementing DeFi in government and identifying problems that need to be addressed. Active support for the formation of digital interoperability between countries, taking into account economic, political and cultural differences, is one of the ways to overcome the challenges faced in the implementation of DeFi in e-government. The need to level the digital divide and ensure equal access to digital technologies for all social and geographical groups is emphasized. The key aspects of this approach are the creation of reliable technologies, the development of international platforms for regulation and collaboration, and the creation of a support fund for the development of digital infrastructure and education in less developed countries. Additionally, it is noted that DeFi, as an innovative segment of digital transformation, requires constant adaptation and improvement in the context of changes in the regulatory environment and technological progress. The development of new standards and regulations that take into account the specifics of DeFi is defined as a critical aspect for ensuring the stability and security of this financial sector. In particular, it is important to address the issues of investor protection and transparency in a high-risk environment.

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Author Biographies

O. Dotsenko, V.N. Karazin Kharkiv National University

Lecturer of the Department of Finance, Banking and Insurance

I. Chubka, V.N. Karazin Kharkiv National University

Student

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Published
2023-12-28
How to Cite
Dotsenko, O., & Chubka, I. (2023). DEFI: a tool for digital transformation of the state. Bulletin of V. N. Karazin Kharkiv National University Economic Series, (105), 94-105. https://doi.org/10.26565/2311-2379-2023-105-10