Volume 16, Number 3

Integration of Decentralized Finance (DeFi) in the U.S. Supply Chain Finance: Opportunities, Challenges, and Future Prospects

  Authors

Omoshola S. Owolabi, Prince C. Uche, Nathaniel T. Adeniken, Emmanuel Hinneha and Samuel Attakorah, Carolina University, USA

  Abstract

This research examines the integration of decentralized finance (DeFi) in supply chain finance and its potential to revolutionize traditional financial systems. The study aims to provide an understanding of how DeFi can overcome the limitations of traditional supply chain finance methods and create new opportunities for businesses. The research starts by discussing the challenges faced by supply chain finance and introduces DeFi as a solution. Using blockchain technology and smart contracts, DeFi enables a transparent and trustworthy system for real-time tracking of financial transactions and assets, this transparency reduces the risk of fraud and enhances decision-making. The study explores how DeFi can streamline and automate various supply chain finance processes, such as invoice factoring, trade finance, and payments, using smart contracts and decentralized applications. However, there are challenges and limitations that need to be addressed for successful implementation. The implications of DeFi for the US financial system, including risks to traditional institutions and regulatory considerations, are also discussed. The research proposes potential solutions and prospects for DeFi in supply chain finance. Additionally, the research examines the potential impact of DeFi on the US economy and job market, highlighting the emergence of new job roles and skills. The study concludes by providing key findings and recommendations for stakeholders, including companies, policymakers, and researchers. The integration of DeFi in supply chain finance offers an opportunity to transform financial operations and relationships within the supply chain. Collaboration, innovation, and strategic efforts from all stakeholders are crucial for realizing the potential of DeFi. The US should take a proactive approach by developing regulatory frameworks, fostering research and development, promoting partnerships, and investing in education and talent development to position itself as a global leader in supply chain finance innovation.

  Keywords

Decentralized Finance, Supply Chain Finance, Blockchain, Smart Contracts, Transparency, Automated Processes, Regulatory Frameworks, Integration, Technology.