Impact of Decentralized Finance (DeFi) Adoption on Financial Resilience: Role of Trust in Blockchain Technology

Financial resilience is influenced by Decentralized Finance (DeFi ) adoption only if people possess financial literacy and have limited risk perception, while the intermediary of trust in blockchain technology also influences DeFi adoption. Through quantitative research, the study investigates the positive role that DeFi adoption plays in improving financial resilience via superior liquidity management, asset diversification, and enhanced absorption of adverse economic shocks. It demonstrates the critical role trust plays in a technology such as blockchain, which uses its transparency, security and immutability to gain users’ trust. Fifth, findings demonstrated how financial literacy is a bridging link in the relationship between DeFi take-up and financial resilience, while risk perception weakens the encouraging effects of trust in blockchain technology. To uncover direct, mediating, and moderating relationships, utilize structural equation modelling to analyze data collected from individuals and organizations involved with DeFi platforms. The research findings provide policymakers, academics, and practitioners with an inside look at potential solutions to promote a safe and inclusive DeFi ecosystem. The study fosters financial resilience and inclusion in an increasingly evolving decentralized financial landscape by addressing the two distinct groups’ trust, financial literacy, and risk perception.