Crypto Insights - Parts 1 and 2

The crypto economy has turned heads over the past year as institutions are publicly committing to digital assets. While the Bitcoin price has captured the news, the real story has been decentralised finance (DeFi) and the rise of the creator crypto economy, embodied by the trading of crypto collectable images and adoption of play-to-earn gaming.

In the Crypto Insights series, KPMG has pulled together its in-market insights from working with regulators, financial investors and the crypto industry. All instalments are companion pieces that go into detail on how DeFi protocols are structured, as well as other cutting-edge crypto use cases.

Barnaby Robson

Partner, Deal Advisory, Hong Kong SAR

KPMG China

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Paul McSheaffrey

Partner, Financial Services

KPMG China

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Part 1: An Introduction to Decentralised Finance

DeFi consists of financial services enabled by public blockchains and smart contracts executing rules set by developers and governance token-holders, with no ability for a central party to intervene or manipulate users’ assets. This is a new way of building, based on constantly developing innovative technologies pushed forward by a large community of tech-savvy market participants.

This backdrop attracts two potentially opposing forces – accelerated innovation and regulatory attention. In this instalment, KPMG offers a background to decentralised finance and key factors which we believe will impact its evolution.

Crypto Insights: An introduction to Decentralised Finance (DeFi)

Crypto Insights Part 1: An Introduction to Decentralised Finance

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Part 2: Decentralised Exchanges & Automated Market Makers – Innovations, Challenges and Prospects

In the second report of the Crypto Insights series, KPMG examines the Decentralised Exchanges (DEXs) that enable token trading. Crypto projects run on tokens which allow liquidity to flow into the most productive and in-demand protocols. A key challenge for early DEXs was liquidity, however this has by and large been solved by an innovation called ‘Automated Market Makers’ (AMM).

In this instalment on DEXs, KPMG discusses the competitive landscape, the AMM innovation and mechanics, advantages and challenges of AMMs, and the future of DEXs.