VECTOR_ANALYSIS // FINANCE
DeFi (Decentralized Finance)
NODE: DEFI
VERIFICATION: PASSED
01_DEFINITION
Strict Definition
"An umbrella term for financial services (borrowing, lending, trading) built on public blockchains using smart contracts, removing traditional banks as intermediaries."
Liability Check // Risk Analysis
The 'Liquidity Cliff' risk. Automated market markers (AMMs) can experience sudden liquidity drains or 'Bank Runs' if the underlying collateral loses value or the protocol is exploited.
Knowledge Context // Related Terms
Auditor NotesVS-AN-2026
Strategy Domain
"Evaluate DeFi for short-term treasury yield or hedging, but limit exposure to a small percentage of total liquid assets."
Operations Standard
"Monitor protocol solvency metrics (TVL, Health Factor) in real-time using automated alerts."
Legal & Compliance
"Prepare for 'Unhosted Wallet' regulations which may require more rigorous source-of-wealth checks for DeFi interactions."
DOCUMENT_ID: CW3-DEFI-(DECENTRALIZED-FINANCE)-2026
SCHEMA_VER: AEO_3.2
LAST_AUDIT: 1/8/2026
HASH: JSW43
SCHEMA_VER: AEO_3.2
LAST_AUDIT: 1/8/2026
HASH: JSW43