DeFi Fundamentals
Master the fundamentals of Decentralized Finance (DeFi) and learn how blockchain technology is revolutionizing traditional financial services through permissionless protocols and smart contracts.
26 lessons
1: Introduction and Overview of DeFi
Explore the transformative world of Decentralized Finance (DeFi), where financial services operate on blockchain technology without traditional intermediaries. Understand its core properties, technology stack, and the potential impact on global finance.
2: Introduction to Blockchain Technology
This chapter delves into the foundational concepts of blockchain technology, tracing its evolution from Bitcoin's inception to modern scaling solutions and cross-chain interoperability that are shaping the future of decentralized finance.
3: Introduction to Traditional Finance
Explore the foundations of traditional finance systems, understanding how banks, markets, and intermediaries operate. Learn about the structure, mechanisms, and limitations of conventional financial services that DeFi aims to transform.
4: Introduction to Smart Contracts
Dive into smart contracts, the foundational technology powering DeFi. Learn how programmable contracts execute automatically on blockchains, enabling trustless financial applications and decentralized protocols.
5.1 Introduction to Decentralized Exchanges
Understand the evolution from traditional order book exchanges to automated market makers. Learn how DEXs revolutionize trading through smart contracts and liquidity pools.
5.2 Constant Product Market Makers: The Uniswap Model
Deep dive into the constant product formula (x*y=k) that powers Uniswap. Learn the mathematics behind automated market makers, price determination, and how liquidity pools work.
5.3 The Economics of Liquidity Provision
Understand the economics of being a liquidity provider. Learn about impermanent loss, fee generation, risk-return tradeoffs, and strategies for profitable liquidity provision in DeFi.
5.4 Arbitrage and Price Discovery in AMMs
Learn how arbitrageurs keep AMM prices aligned with markets. Understand arbitrage mechanics, flash loans, multi-hop strategies, and why arbitrage is essential for AMM functionality.
5.5 Beyond Constant Product: Generalizing AMMs
Explore advanced AMM designs beyond the constant product formula. Learn about Curve's StableSwap, Balancer's weighted pools, Uniswap v3's concentrated liquidity, and how different invariant curves optimize for specific use cases.
5.6 StableSwap and Trading Similar Assets
Deep dive into Curve Finance's StableSwap algorithm. Learn how combining constant sum and constant product formulas creates the most efficient AMM for stablecoins and pegged assets.
5.7 Concentrated Liquidity: Uniswap V3 Revolution
Master Uniswap V3's concentrated liquidity innovation. Learn how price ranges, virtual reserves, and NFT positions enable unprecedented capital efficiency and active liquidity management strategies.
5.8 Proactive Market Making: The DODO Approach
Explore DODO's innovative Proactive Market Maker (PMM) algorithm that uses external oracles to set prices. Learn how oracle-based pricing enables superior capital efficiency and single-sided liquidity provision.
6.1 Oracles: Bridging On-Chain and Off-Chain Data
Master blockchain oracles and how they bring external data on-chain. Learn about the oracle problem, Chainlink's decentralized networks, price feeds, and best practices for using oracles securely in DeFi protocols.
7.1 Decentralized Lending: Aave and Compound
Master decentralized lending protocols like Aave and Compound. Learn how collateralized lending works, interest rate models, liquidation mechanics, and the mathematics behind permissionless borrowing and lending.
8.1 Stablecoins: Mechanisms and Stability
Master stablecoin mechanisms and stability models. Learn about fiat-backed, crypto-collateralized, and algorithmic stablecoins. Understand how DAI, USDC, and other stablecoins maintain their peg, manage collateral, and handle market volatility in decentralized finance.
9.1 Privacy on the Blockchain: Techniques and Protocols
Master privacy techniques and protocols on the blockchain. Learn about zero-knowledge proofs, mixing protocols, and privacy-preserving technologies. Understand how Tornado Cash, zk-SNARKs, and other privacy solutions enable anonymous transactions while maintaining blockchain security and compliance considerations.
DeFi Security I: Smart Contract Vulnerabilities
Explore the vulnerabilities in DeFi smart contracts that have led to billions in losses. Learn about common exploits such as reentrancy, access control flaws, and more, with real-world examples like the Poly Network hack.
DeFi Security II: Advanced Attacks and Economic Exploitation
Explore the complexities of DeFi security, focusing on advanced attacks like bridge vulnerabilities, economic exploits, and the systemic risks they pose to the blockchain ecosystem.
Decentralized Identity: Who Are You On-Chain?
Explore the challenges and solutions of decentralized identity in blockchain, addressing Sybil attacks, governance, and undercollateralized lending while maintaining privacy and inclusivity.
Decentralized Identifiers (DIDs)
Learn about Decentralized Identifiers (DIDs), the W3C standard for self-sovereign identity, including DID methods, resolution, and authentication flows.
Verifiable Credentials
Learn about Verifiable Credentials (VCs), zero-knowledge proofs for selective disclosure, and credential revocation mechanisms for decentralized identity systems.
Proof of Personhood Systems
Explore Proof of Personhood systems including Worldcoin's biometric verification, Proof of Humanity's video verification, and BrightID's social graph approach to proving unique humanness.
Soulbound Tokens & ENS
Learn about Soulbound Tokens (SBTs) for non-transferable reputation and ENS (Ethereum Name Service) for human-readable blockchain addresses and rich identity profiles.
Identity Applications & Real-World Use Cases
Explore real-world applications of decentralized identity including Gitcoin Passport, IPFS for content addressing, quadratic funding with Sybil resistance, and practical use cases in lending, governance, and social networks.
Privacy, Future & Conclusion
Explore privacy considerations in decentralized identity, emerging trends, open questions, and the future of self-sovereign identity systems in Web3.