As the consumer shift to online shopping has accelerated, decentralized finance (DeFi) gets a foothold in the e-commerce industry on the back of decentralization merits. This has prompted the e-commerce giants such as Alibaba and eBay to explore the potential of DeFi to avoid middlemen like financial institutions and consolidate their market position, finds GlobalData, a leading data, and analytics company.

Kiran Raj, Principal Disruptive Tech Analyst at GlobalData, comments: “In the current centralized marketplace, e-commerce players enjoy complete control on the fees charged for accessing their platforms, which has often led to dissatisfaction among sellers. At the same time, buyers are not privy to the details of their consumption habits as middlemen like banks can monetize the data or sell them to advertisers to influence their future decisions. DeFi holds a promise to address such concerns by eliminating centralized financial institutions and giving more power to the consumers.”

GlobalData’s latest DeFi report, ‘Gradually, then Suddenly: Can DeFi become a viable alternative to traditional finance?’, highlights various game-changing patents filed in the DeFi area, including those by e-commerce giants leveraging blockchain-powered smart contracts to bypass middlemen.

Alibaba has filed a patent for a decentralized product purchase method and system where sellers can verify the transactions done via digital assets like cryptocurrencies or others. Smart contracts enable the execution of product purchase and distribution by completing the payment proof for the target quantity of a product. Such mechanisms help in creating trust in a decentralized environment while reducing transaction costs incurred by involved parties.

eBay has filed a patent for the secure control of crypto transactions between sellers and buyers using smart contracts on DeFi platforms like Ethereum. A payment transaction requires verification of digital signature from the buyer as well as computer-implemented intermediary server to execute the transfer of funds to a seller. The invention also allows for the refund transaction which requires verification of digital signature from the seller and intermediary server. This method makes transactions safe and reliable with features such as traceability and recallability.

Mr. Raj concludes: “The next major shift in how e-commerce platforms work could be architected by DeFi. The elimination of banks and their services for transaction purposes can offer e-commerce players enough room to experiment with innovative incentive models for consumers while also offering them more freedom. In the future, new crypto technologies such as non-fungible tokens (NFTs) can be combined with DeFi to represent the digital embodiments of the physical goods that are instantly delivered to consumers to provide instant gratification and enjoyment.”