From Financial Intermediation to Protocol Design: Re-Coding the Functions of Credit Markets in DeFi

This study investigates the structural transformation of financial intermediation in the context of decentralized finance (DeFi).Building on canonical theories of intermediation, it reframes traditional credit institutions as epistemic architectures, systems that define, validate, and circulate truth about economic behavior.The paper introduces the DeFi Intermediation Matrix (DIM), a conceptual framework that maps the functional equivalence between institutional and protocol-based mechanisms of trust, including risk screening, liquidity transformation, diversification, and compliance.It demonstrates how blockchain architectures redistribute informational power by substituting trust by institution with trust by design, turning verification from a delegated process into a transparent, auditable function.Through this analytical lens, decentralized finance emerges not as a technological disruption but as an epistemological shift: the evolution of finance from a model of delegated expertise to one of reflexive governance.The work concludes that the future of credit systems depends on designing architectures capable of balancing automation and interpretation, ensuring that transparency does not replace judgment, but sustains it.