Opportunities and Challenges in Decentralised Finance: A Scoping Review of Governance, Security and Adoption Constraints (2020–2025)
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Abstract
Decentralised finance (DeFi) is an increasingly influential development in modern finance, using blockchain to enable peer-to-peer, automated and programmable financial services. While DeFi is widely associated with transparency, efficiency and financial inclusion, the literature also highlights substantial risks that may undermine trust, stability and mainstream adoption. This article presents a scoping review of DeFi research published between 2020 and 2025, mapping its key opportunities and challenges. The review identifies opportunities related to transparency and fraud reduction through immutable ledgers, expanded accessibility via disintermediated services, efficiency gains through smart contract automation, user empowerment through non-custodial participation, and innovation through tokenisation and new financial products. However, the evidence consistently emphasises challenges linked to regulatory ambiguity, legal enforceability and compliance constraints, cyber and smart contract vulnerabilities, market volatility and contagion risks, scalability and interoperability limitations, governance and accountability gaps, consumer protection concerns, and user literacy barriers, including tensions between privacy and anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations.
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