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As I'm making some research on DeFi I got to Werner et al. (2021). In there a lot of terms around DeFi are explained, but the actual meaning of a protocol as the core of a DeFi project itself is not explained. Even in other Threads such as What is DeFi? [Ref:StackExchange] a clear definition is missing.

So as all DeFi projects themselves are quite differently structured I wonder how to define a protocol (if it is the umbrella term for all DeFi projects).

Looking forward your responses!

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So a protocol is formally defined as follow: "the official procedure or system of rules governing affairs of state or diplomatic occasions"-Oxford Dictionary

In layman's terms its a set of rules that is used to perform a specific task.

So when when we pull the definition through to DeFi, a protocol can be seen as the rules set in place to perform and/or support a specific DeFi event. For Example Lending and Borrowig.

Note: Each DeFi project can have their own protocol, or set of protocols, that their project uses in its code or systems and thus differentiates them from the rest; but the definition of a protocol itself stays the same.

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  • ( 1. ) When you say there can be a set of protocols - does it mean that a protocol refers to other protocols (so other DeFi projects and theit functionalities / logic) ? ( 2. ) Can we abstract from the technical term of a protocol and say, that a DeFi project's protocol can be seen as the inner ("business") logic to realize its offered product? ( 3. ) As Ethereum is a virtual machine with multiple projects, couldn't we say that a protocol is more like an open API that can be used by everyone to compose a new "(technical-/business-)logic layer"?
    – Ndrslmpk
    Aug 12 at 15:41
  • 1. If you take the basic explanation of a protocol is a set of rules to perform a specific task, then each task will have its own protocol. So if a task has multiple subtasks, then it can consist out of multiple protocols. 2. Yes we can (Business, Code and system logic) 3. No, an API basically just provides or gets data/info; whether this is commands or basic data. A protocol is the term used for a set of rules to get to a certain result. An API is an actual piece of software Aug 12 at 15:50

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