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Decentralized finance to hybrid finance through blockchain: a case-study of acala and current


Decentralized Finance is an alternative form of finance that has no central authority to control or monitor transactions. Decentralized finance can potentially replace traditional elements of a centralized financial system with smart contracts, a set of self-executing code, enabled through a blockchain. The motive behind such a decentralized mechanism is that it creates a trust-free, transparent, and open-source ecosystem where the transactions can be carried out, eliminating intermediaries. Decentralized Finance has gained increased awareness in late 2020, led by platforms such as Uniswap, Maker DAO, Aave, and Curve. The aggregated market capitalization of Decentralized Finance has crossed USD $87B of total value locked as of May 9, 2021. From stablecoins to tokenized Bitcoin, from money lending to borrowing platforms, decentralized finance has grown exponentially. Decentralized Finance has many advantages over the centralized financial system, but it also suffers from many issues such as slow transactions, and unpredictable, sometimes high transaction costs. This has led to the introduction of Hybrid Finance, which is operated by verified entities over a public blockchain system that is proposed to have high transaction speeds, low transaction costs, and Know Your Customer compliance. This case study outlines the details of the collaboration between Acala, a decentralized finance platform built on the Polkadot blockchain, and Current, a New York-based challenger bank that focuses on mobile payments, online banking, and financial services, as they established a new category in the financial technology sector with Hybrid Finance. The major objective of this study is to understand and appreciate the relevance of blockchain technology for enabling a hybrid finance ecosystem that is trust-free and completely decentralized with no intermediaries.

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The authors would like to thank Ruitao Su, Co-founder of Acala, for his agreement in working with us in the creation of this case study. The authors would also like to thank the Polkadot, Acala team, and Trevor Marshall from Current for sharing the HyFi interview information from the annual Polkadot Decoded conference.


No funding was received for conducting this study.

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Correspondence to V. S. Anoop.

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Anoop, V.S., Goldston, J. Decentralized finance to hybrid finance through blockchain: a case-study of acala and current. J BANK FINANC TECHNOL 6, 109–115 (2022).

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  • Blockchain
  • Decentralized finance
  • Hybrid finance
  • Smart contracts
  • Polkadot