The Shift from Institutional to Code-Based Trust: A Conceptual Framework for Decentralized Finance Adoption in Emerging Economies

Abstract

Decentralized finance (DeFi) relocates parts of financial coordination from regulated intermediaries to blockchain protocols, smart contracts, cryptographic verification, and decentralized governance. Existing adoption studies typically treat trust as a stable antecedent within technology-acceptance models; they therefore say relatively little about how users reallocate confidence between institutional safeguards and computational mechanisms. This conceptual study develops a trust-transition framework for emerging economies by integrating institution-based trust, structural assurance, technology acceptance, diffusion of innovation, and process theories of trust. The proposed mechanism is a staged re-anchoring rather than a complete substitution: institutional trust supplies an initial interpretive anchor; observable protocol properties function as transition cues; code-based trust forms when users infer competence, integrity, predictability, and recourse from those cues; and perceived usefulness, security, risk, and control transmit that confidence into adoption intention and continued use. Regulatory clarity, institutional quality, digital maturity, financial inclusion, protocol literacy, and adverse events condition the strength and direction of these links. Five theoretically derived propositions specify the mechanism, mediation pathway, and boundary conditions. The framework distinguishes code-based trust from system trust, structural assurance, and calculative trust, and offers an operationalization agenda for empirical validation. It contributes to DeFi research by treating trust as a dynamic portfolio of confidence distributed across institutions, code, and hybrid governance arrangements rather than as a single static predictor.