Decentralized

Finance (DeFi) 101

May 2021
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Outline

Slide Topic
3-9 What is DeFi?
10-15 DeFi Examples
16-20 Other Innovations
21-26 Resources
27 Conclusion
28 Questions?
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What is DeFi?

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Evolution of the Internet

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DeFi Timeline

Bitcoin kicked off the idea of decentralization in finance but

Ethereum really made it happen with smart contracts.
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What is Decentralized Finance (DeFi)?

DeFi is a form of finance that does

not rely on central financial
intermediaries such as
brokerages, exchanges, or banks
to offer traditional financial
instruments.

Instead it relies on a decentralized

platform using distributed ledger
technology called the blockchain.

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The Blockchain

7
Traditional vs DeFi

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The Layers of DeFi

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DeFi Examples

10
Real World DeFi Products

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MakerDAO - https://makerdao.com/
● MakerDAO has a stablecoin called DAI that is pegged to the
US Dollar

● MakerDAO wants to be a decentralized reserve bank

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Uniswap - https://uniswap.org/
● Uniswap is a distributed
exchange (DEX) that provides
an automated market making
function
● You would use this exchange if
you wanted to switch from one
token to another
● In a traditional exchange you
would have a single institution
that provides liquidity using an
order book to match buyers and
sellers

Traditional Order Book 13

Uniswap

● Anyone can participate as a liquidity provider and get compensated

● Uniswap charges 0.30% to swap between tokens and the full 0.30% goes to the liquidity
provider (LP)
● In the future, 0.25% will go to the LP and 0.05% will go to the Uniswap Governance, which is
a Distributed Autonomous Organization (DAO)
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Compound - https://compound.finance/
● Compound is a lending and borrowing platform
● If you have tokens in your cryptocurrency wallet, you can lend them to
others and earn interest on them

15
Other Innovations

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How is a JPEG worth $69 million?

“Everydays: The First 5000 Days”

by Beeple 17
What is an NFT?
● Fungible means something
can be interchanged, such as
a one bitcoin can be swapped
with another bitcoin
● A non-fungible token (NFT) is
simply a unique digital asset
● NFTs use the same
technologies as DeFi -
blockchain and
cryptocurrencies https://nbatopshot.com/
● NBA Top Shot is an example
of an NFT platform
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CryptoPunks - https://www.larvalabs.com/cryptopunks
● CryptoPunks is an NFT art project that
was released in June 2017 CryptoPunk #7804
● They are 24x24 pixel art images, sold for $7.5 million in
generated algorithmically March 2021
● There are only 10,000 unique
CryptoPunks assets

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Distributed Autonomous Organization (DAO)
● In DeFi even the management is
distributed using something
called a Distributed Autonomous
Organization (DAO)
● For example, Uniswap is
technically a protocol and
changes to the protocol need to
be voted by the DAO
● In Uniswap you receive tokens
when you provide liquidity and
those tokens are like votes

Uniswap UNI token https://etherscan.io/token/0x1f9840a85d5aF5bf1D1762F925BDADdC4201F984 20

Resources

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Decrypt - https://decrypt.co/
● News on Bitcoin, Ethereum and DeFi

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CoinMarketCap - https://coinmarketcap.com/
● Real-time cryptocurrency prices and other DeFi related products

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DeFi Pulse - https://defipulse.com/
● Tracks the biggest Decentralized Apps (Dapps)

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DappRadar - https://dappradar.com/
● Another website that tracks DeFi Dapps

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Modern Finance Podcast - https://www.modern.finance/

● The Modern Finance

(MoFi) podcast covers all
things cryptocurrency,
DeFi, yield farming, NFTs,
robo-investing, finance
hacks, and more

● It’s hosted by Kevin Rose

who has been around
technology since the
2000s
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Conclusion
● The current hype around
Bitcoin, Ethereum and NFTs
is very similar to the dotcom
bubble

● Many companies and ideas

will not survive but the core
technology and
decentralization thought
process is here to stay

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Questions?

https://celestri.org
mrjain@gmail.com
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