The Secret Key to the Heart of Decentralized Finance : Unlocking the Potential of Crypto Assets and Currencies to Advance the Financial Sector

The rise of decentralized financial applications, such as crypto assets and currencies, challenges traditional banking and finance’s roles and value proposition. To remain competitive traditional finance organizations and institutions need to learn from innovations in decentralized finance. Hence, they must gain a broad and deep understanding of this emerging ecosystem. In addition, it is crucial to acquire specific design knowledge, to develop innovative but regulatorily compliant crypto assets and currencies. Furthermore, centralized institutions in this domain need to manage crypto assets and currencies effectively to mitigate risk while improving portfolio performance. In light of this paradigm shift, this dissertation seeks to guide the financial sector in designing and managing crypto assets and currencies. To achieve this objective, I structure my dissertation along three research goals: first, establishing an understanding of decentralized finance, and second and third, providing guidance in the design and, respectively, management of crypto assets and currencies. To address the first research goal, I capture the state of the art in decentralized finance, develop a consolidating definition, devise a research framework, and propose future research directions (Essay 1). To achieve the second goal, I focus on guiding traditional finance organizations in designing crypto assets and currencies by developing novel information technology artifacts and proposing design suggestions, specifically, for blockchain-based equity tokens (Essay 2) and privacy-enhanced but regulatorily compliant digital payment systems (Essay 3). Lastly, to achieve the third goal, I provide investors with valuable insights into the efficient portfolio management of crypto asset and currency (Essay 4). The findings of this dissertation contribute to the body of knowledge on crypto assets and currencies through exploratory, prescriptive, descriptive, and analytical research methods. Specifically, the pluralistic research approach permits the generation of richer and more reliable knowledge for both the information systems and finance research domains. Overall, this dissertation provides theoretical and practical insights into the design and management of crypto assets and currencies.