<b>Decentralized Finance On Blockchain and Smart Contract Based Financial Markets</b> The term decentralized finance DeFi refers to an alternative financial infrastructure built on top of the Ethereum blockchain. DeFi uses smart contracts to create protocols that replicate existing financial services in a more open, interoperable, and transparent way. This paper highlights opportunities and potential risks of the DeFi ecosystem. I propose a multi layered framework to analyze the implicit architecture and the various DeFi building blocks, including token standards, decentralized exchanges, decentralized debt markets, blockchain derivatives, and on chain asset management protocols. I conclude that DeFi still is a niche market with certain risks but that it also has interesting properties in terms of efficiency, transparency, accessibility, and compos ability. As such, DeFi may potentially contribute to a more robust and transparent financial infrastructure. 42-54 International Conference on Advances in Engineering, Science and Technology – 2021 Special Issue Jagjeet Jena | Harsh Singh Chauhan