First Lecture: Introduction to Decentralized Finance

Introduction

Table of Contents

• Readings

• Introduction to Decentralized Finance
  • What is DeFi?
    • Overview of DeFi as a financial ecosystem built on blockchains.
    • Ethereum as the main platform for DeFi.
    • ERC-20 tokens.
    • Key differences between DeFi and traditional finance (TradFi).
  • Core components of DeFi:
    • Decentralized exchanges (DEXes).
    • Stablecoins and their role in DeFi.
    • Lending and borrowing platforms.
• Key DeFi Projects and Use Cases
  • Uniswap v2 and Uniswap v3 (technical and detailed).
  • Aave, Compound, and MakerDAO.

Readings

The readings for this lecture will mostly consist of whitepapers to fully understand the largest application layer of blockchain technology, i.e., decentralized finance. It is actually quite amazing that these documents are available for everyone to read, imagine if the similar documents were available for the traditional financial industry, that would be very interesting.

Readings:

• ERC-20: Token Standard
• Uniswap v2 Whitepaper
• Maker DAO Whitepaper
• Aave v1 Whitepaper

Supplementary readings:

• Uniswap v1 Whitepaper
• Uniswap v3 Whitepaper

Note that the Uniswap v1 whitepaper is a “website” and not a pdf file, however this is often the case in the blockchain space. For example, if you want to read how the idea about automated market makers initially was discussed you can read the following reddit post from 2016 by Vitalik Buterin Let’s run on-chain decentralized exchanges the way we run prediction markets. Two years later, in 2018, Vitalik Buterin made a post on ethresearch (a forum for Ethereum research) Improving front running resistance of x*y=k market makers.