Why in the News?
Decentralised Finance (DeFi) is rapidly expanding as a global financial innovation, enabling direct peer-to-peer transactions without intermediaries such as banks.
What is DeFi?
- It is a financial system that runs on blockchains like Ethereum.
- It allows people to send, borrow, lend, invest, and trade money directly without banks.
- All transactions happen using smart contracts (computer programs) and apps called dApps.
- Anyone with a phone + internet can use it; no bank account or KYC needed.
Features of DeFi:
- No middlemen: Works without banks or brokers.
- Smart contracts: Deals happen automatically once rules are met.
- Open access: Anyone in the world can join with just a digital wallet.
- Transparency: Every transaction is recorded on a blockchain for all to see.
- Cross-border: Can be used internationally, without currency or banking restrictions.
- Low cost & fast: Cheaper and quicker than traditional banking.
- Anonymous: Many platforms don’t ask for ID, making it open but risky.
DeFi in India:
- Adoption: India ranks third globally in DeFi value (Chainalysis Global Crypto Adoption Index 2024).
- Growth Drivers:
- Large youth population and widespread smartphone use.
- Strong digital payments ecosystem (UPI, JAM trinity).
- Increasing retail investor interest in crypto-assets.
- Uses: Indian users engage in lending, trading, yield farming, and staking via DeFi platforms like Aave, Compound, and SushiSwap.
- Market Size: Projected to reach USD 1.7 billion by 2025.
- Challenges: Regulatory uncertainty, risks of money laundering and terror financing, cyber vulnerabilities, and lack of investor protection.
| [UPSC 2025] With reference to the Government of India, consider the following information:
Organization: Some of its functions: It works under I.Directorate of Enforcement: Enforcement of the Fugitive Economic Offenders Act, 2018 : Internal Security Division- I, Ministry of Home Affairs II.Directorate of Revenue Intelligence: Enforces the Provisions of the Customs Act, 1962 : Department of Revenue, Ministry of Finance III.Directorate General of Systems and Data Management: Carrying out big data analytics to assist tax officers for better policy and nabbing tax evaders: Department of Revenue, Ministry of Finance In how many of the above rows is the information correctly matched? (a) Only one* (b) Only two (c) All the three (d) None |
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