DeFi - Business of Decentralized Finance (DeFi)

Explore the characteristics of DeFi platforms, trustless, permissionless, and automated, built on blockchain networks with non-custodial smart contracts that mitigate custodial risks, and compare DeFi with CeFi.

Understand the differences between CeFi and DeFi, including custodial vs non-custodial control, KYC, fiat-crypto conversions, and automated market-making, illustrated by Coinbase and Uniswap.

MakerDAO case study outlines a lending protocol issuing DAI, a USD-pegged stablecoin backed by collateral via Maker Vaults, with a DAI-based stability fee and governance-approved collateral in multi-collateral DAI.

Explore Aave, a major defi lending platform with over 13 markets across Ethereum, Avalanche, Polygon, and Arbitrum, offering tokenized real-world assets and over-collateralized loans with a 0.75 DAI loan-to-value cap.

Analyze Curve Finance, a decentralized exchange for stablecoins on Ethereum and other networks, leveraging liquidity pools and the stable swap invariant to enable low-fee, low-slippage trades.

Explore how liquidity pools power DeFi markets by replacing traditional market makers with automated market makers that use algorithms to provide continuous buy and sell liquidity.

DeFi platforms incentivize asset holders to provide liquidity to liquidity pools for automated market makers, offering trading fees and governance tokens, fueling yield farming strategies.

Explore how liquidity mining works on the Compound protocol, where cTokens, including cERC20 and CEther, represent assets, accrue interest via exchange rates, and can be used for collateral or loans.

Explore liquidity mining on PancakeSwap, a leading Binance Smart Chain dex, where cake-bnb pools issue LP tokens and providers earn a share of the 0.25% trading fee.

Explore Burniske and Tatar's framework for valuing DeFi tokens using the equation of exchange, linking crypto asset market cap, velocity, price, and transactions to demand and token supply decisions.

Explore what drives DeFi platform value, including demand, competition, and access across networks. Examine token utility, supply, liquidity, and sentiment, plus gas costs and cross-chain use shaping value.

Maker creates the USD soft-pegged DAI via collateralized debt positions, is decentralized, and governed by MakerDAO with MKR as the governance token.

Matic tokens, an ERC-20 on Ethereum, power fees and validators staking in Polygon's POS, a sidechain scaling solution offering up to 65,000 tps and 19,000 dApps.

Explain how tokens function as blockchain assets that can represent value, from fungible ERC-20 tokens to non-fungible ERC-721 tokens, with unique IDs and asset metadata.

Explain token minting, supply and burning schedules, including per-block and daily minting, pre minting, and burning mechanics, illustrated by Cake tokenomics.

Explore tokenomics case studies: Sushi token on Ethereum as Sushiswap’s ERC 20 native asset, TORN governance via proposals and votes, OGN for staking, governance, advertising, Origin dollar stablecoins.

Explain why DeFi projects need cash flows to incentivize liquidity providers, cover costs, and reward the DAO, using examples like treasury funding and buybacks to sustain the network.

Explore how the Maker protocol generates cash flow from stability fees, trading income, and liquidations to support Dai and its peg, via vaults, the peg module, and DSR.

Explore decentralized autonomous organizations, or daos, as internet native governance where members collectively own and manage assets via blockchain, smart contracts, and automated, auditable voting.

Explore growth challenges faced by DeFi platforms, focusing on high gas fees on Ethereum and how rising gas prices impact micro-transactions and drive migrations to Polygon and Solana.

DeFi platforms face throughput limits, with Visa up to 1700 tps vs Bitcoin and Ethereum at 6–20 tps; lecture explains layer 1 and layer 2 scaling, including rollups and sidechains.

Regulatory challenges threaten DeFi's growth, as global regulators push for safeguards, investor protection, and compliance, with BIS advocating proper regulation and authorities' interference in governance.