Abstract

This dissertation explores the evolving landscape of decentralized finance (DeFi), addressing critical challenges such as scalability, consumer protection, front-running, and stablecoin stability. By bridging the gap between technological advancements and regulatory needs, the research provides innovative solutions to enhance DeFi’s accessibility, security, and scalability.
The study investigates fast withdrawal mechanisms in optimistic rollups, enabling users to bypass the traditional seven-day dispute period through tradeable exits. By implementing and analyzing these exits on platforms like Arbitrum, the work evaluates their efficiency, scalability, and risks, offering practical insights into dispute management.
Decentralized order books form another key focus, with a detailed examination of their feasibility, performance, and front-running vulnerabilities. Through the implementation of the Lissy exchange on Ethereum and Layer 2 solutions, the research demonstrates significant improvements in gas efficiency and scalability while proposing novel strategies to mitigate transaction manipulation.
The dissertation also provides a systematized framework for understanding stablecoins, categorizing their stability mechanisms and highlighting vulnerabilities. This analysis lays the groundwork for assessing their role in mitigating volatility and enhancing financial inclusion.
Overall, this work contributes to DeFi’s maturation by addressing technical and regulatory challenges, ensuring user centric design while promoting financial innovation. The findings aim to align DeFi with consumer protection frameworks, paving the way for its broader adoption as a reliable alternative to traditional financial systems.