#DEFI OVERVIEW SERIES#

This incredibly impactful for financial products’ scalability because crypto decreases the friction and increases the speed of financialization. The token itself is wrapped with vehicles, rather than being placed and held in a vehicle for it to have its mobility. Smart contracts allow for the value in structured products to become mobile themselves rather than necessitating that the value be placed into a vehicle. Onchain products are far more scalable and efficient. However, it is possible to create smart contracts which act as an index fund which is traded and fungible on-chain. Companies like Bitwise, and perhaps someday BlackRock, offer broad market exposure to cryptos across layer ones and within layer one ecosystems, all of which is in a product that exists off-chain. Index products are the most critical component to crypto going mainstream as an investible asset class. Because layer one block space is limited and valuable, scaling solutions or alternative layer ones are necessary to scale these platforms to the level of throughput of the Web2 internet and analogue financial markets now. This layer can provide increased scalability by increasing transaction speeds (faster finality) and transaction throughput (more transactions per second). Layer twos are scaling solutions built on top of layer ones. These layer ones will differ in the consensus mechanism- how a network provides security, scalability/throughput, and decentralization (or centralization). Layer ones are networks that act as infrastructures for other applications, protocols, and other networks to build on. Within the block, transactions wait for consensus to be reached which means they have verified that all of the accounts queuing transactions are eligible for such interactions. Smart contract platforms are blockchains that facilitate users’ interactions with the contracts by compiling them into a block.

These contracts have limited parameters as determined by the developers of them. Smart contracts are programmable applications that can execute on predetermined conditions. Reach out if you have any questions or would like me to cover specific topics! Please like, comment, and share if this content was useful. Here is the first piece of my DeFi primer series. It should also not be understood as financial advise or recommendations, but a spring board to dive into topics for your own research.

#DEFI OVERVIEW SERIES#

So these series should be viewed as living documents, much like the constantly evolving nature of this subject. It would be nearly impossible to prudently encompass all of the protocols’ unique innovations and may be subject to a survivorship bias. From this point of view, we can understand how disparate protocols can be composed together to create robust ecosystems and more efficient capital markets so that one day traditional financial markets evolve from its current analogue infrastructure to its truly digital future. The core focus of these series is to understand what is innovative from a technical level and to see how protocols iterate nuances upon these innovations. From here we can explore the various verticals that DeFi will expand onto, new technologies and iterations of old ones. The aims of this paper is to design a root to build a tree of knowledge from, so others may build their understanding upon it. With my sole focus on crypto now, I’d like to present a paper I drafted for my former colleagues to help provide a diving board for understanding crypto and DeFi.

I am excited to announce that I will be joining Sino Global Capital, a truly Web 3 venture capital fund with a strategic focus on Asia, investing in early stage companies innovating in blockchain and digital asset ecosystems. It has been a while since I last wrote here and a lot has changed! As I started drafting my latest Substack, I decided that I had to jump into crypto and could not wait any longer.

Defi overview