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Decentralized Finance or DeFI is a complete misnomer since world-wide finance is already decentralized as there is not a single central authority. What most people mean by DeFI is Blockchain currency or Anarchy in the financial sector of the economy.
- New York Times article
The idea that "code is law," observed in a 1999 book by Harvard University's Lawrence Lessig, has been embraced by the cryptocurrency industry, with some firms contending code can be a better arbitrator than traditional regulators. However, issues have emerged in the decentralized finance (DeFi) sector, with hackers this summer overriding smart contract instructions to steal $600 million from the Poly Network, which lets users transfer cryptocurrencies across blockchain networks. DeFi platforms typically are established as Decentralized Autonomous Organizations governed democratically by a community of users who vote with crypto tokens. Said Lessig, "We need a more sophisticated approach, with technologists and lawyers sitting next to behavioral psychologists and economists," to define parameters to code social values into programs.
- Ephrat Livni, For Rules in Technology, the Challenge is to Balance Code and Law (2021-11-23) https://www.nytimes.com/2021/11/23/business/dealbook/cryptocurrency-code-law-technology.html