DeFi is a complicated subject to learn with a steep learning curve and an incredibly fast pace of innovation. At the same time, it is much more risky than traditional finance as there are both financial risks, legal risks, as well as blockchain-specific risks to take into account. When you read the documentation of DeFi projects (you should!), you will usually encounter a disclaimer somewhere in the beginning saying that users “should do their own research (DYOR) and be aware of the risks”. While true, it glosses over another truth: it is difficult to find high-quality information which describes coherently what those risks are exactly.
The purpose of this book is to give you a framework that will guide you through your own DeFi journey, along with formula's to calculate your own risks and returns. By reading it, you are doing your own research and will be knowledgeable enough to know what the major risk/reward trade-offs are for projects that are described within it. With that said, I did not intend to write this book as financial advice and numbers contained within it are mostly for illustration purposes. It is also not an introduction to blockchain, we will assume that you are already with the basics such as what consensus algorithms and wallets are. We will only cover these briefly to ensure that this book can be understood from the grounds-up. Even so, I encourage you to read-up on these topics beyond what is written here if you haven't already.
This book was originally intended as an introductory text for upper undergraduate business majors. We follow the somewhat unusual development design of Bayesian Methods for Hackers. All content is open-source: everyone is free to read, but also to contribute to the book using github.
The preliminary table-of-contents is as follows:
| Section | Chapter | Readiness |
|---|---|---|
| Prologue | ✓ | |
| Foundations | Origins | ✓ |
| Blockchain Technology | (in progress) | |
| Ethereum | 80% | |
| Crypto-Assets | Introduction to DeFi | |
| Fungible Tokens | ✓ | |
| Stablecoins | ✓ | |
| Algorithmic Stablecoins | ✓ | |
| Crowdfunding | ||
| Applications | Credit Markets | 90% |
| Automated Market Makers | ✓ | |
| Liquidity Mining & Yield Farming | (in progress) | |
| Perpetuals | ||
| NFT | Non-Fungible Tokens | (in progress) |
| IPFS | ||
| Selected Topics | Layer 2 Solutions | |
| Bots and Arbitrage | ||
| The Cryptography behind Blockchain | (in progress) | |
| Hashing Functions in Blockchain | (in progress) | |
| Solidity Basics | (in progress) | |
| Tradition Finance Review | (in progress) |
In general:
- If you see something that is missing, feel free to propose an addition in writing or using github.
- Nothing is set in stone.
- Cleaning up explanations, grammar, spelling, figures.
- Suggestions
- ...
We use LyX, a cross-platform document editor which transpiles to TeX, the final result is created automatically using XeTeX. You don't actually need to have a functioning LaTeX set-up on your computer to make edits. Once you have downloaded the github files, open up any of the relevant chapters in the /src directory in LyX and you can start editing.
- All commits are welcome, even if they are minor ;)
- If you are unfamiliar with Github, you can email me contributions to the email below.
Thanks to all our contributing authors, including (in chronological order):
| Authors | ||
|---|---|---|
| Enric Junque de Fortuny | ... | |
Contact the main author, Enric Junque de Fortuny at ciri@virtuax.be.