Decentralized finance (DeFi) is a rapidly growing field in fintech, having grown from $700 million to $100 billion over the past three years alone. But the lack of reliable information makes this area both risky and murky. In this practical book, experienced securities attorney Alexandra Damsker explains DeFi's role in both blockchain and finance.

Ideal for developers looking to build decentralized applications (DApps), this book compares DeFi to traditional bank-led fintech and explains why DeFi is exploding in interest and popularity. You'll explore the growing array of DApps and platforms in various categories, including their benefits and drawbacks, and learn how DeFi tools work together from the perspective of both users and developers.

With this book, you will:

• Learn how DeFi fits into the blockchain and fintech worlds
• Understand why it's important to move beyond the banking system
• Explore the tools for building a useful, functional DeFi application
• Learn the risks, benefits, regulatory concerns, and unresolved issues in this nascent and fast-growing industry
• See which technologies are well-positioned to be incorporated into DeFi blockchains in the near future
• Assess your own risk level to determine which strategies are most appropriate

Table of Contents

Chapter 1. Introduction to Defi

Chapter 2. The Building Blocks of Defi

Chapter 3. The Tools of Defi

Chapter 4. How to Build a Defi Application or Protocol

Chapter 5. Making Money with Defi

Chapter 6. The Future of Defi

Decentralized finance, or DeFi, is just about finance without banks. It’s one of the core use cases for blockchain, which is really an innovation in accounting. DeFi will eventually be a key part of finance for people, and one of the primary ways people earn returns on their assets, whether fiat or cryptocurrency. Banks need competitors, and so do DeFi protocols. Together, they will allow people to get the highest and best returns on their assets for the lowest cost and risk.

This book is not about promoting specific DeFi protocols, or even about promoting the current state of DeFi. It is about understanding the entirety of the space—where it fits into blockchain, its core elements, how to operate in the space, and the future of DeFi.

People who enter blockchain—and even those who have been in it for years—tend to have a sort of “Swiss cheese” knowledge: very deep and detailed in some areas but almost nonexistent in others. Accordingly, this book has significant background information, explaining the history and technology of blockchain and the key concepts of finance. This is to ensure that readers have a more complete understanding of how these fields merge in the DeFi industry, and what the potential and limitations truly are.

Who Is This Book for, and What Will You Learn?

This book is for anyone, whether from a business or technical background, who needs a grounding in the blockchain and DeFi space and wants to build compliantly and productively. It is also for anyone who wants to learn how to operate protocols or invest money in the DeFi space. Finally, it is for anyone who wants a great explanation of how things work in blockchain and/or finance, without getting bogged down in acronyms and jargon. You don’t need to have any prior knowledge to use this book.

The book is not intended to be a detailed, language-specific, step-by-step analysis and implementation guide for building DeFi protocols for a specific set of requirements. After reading this book, you should have the understanding and knowledge to help design, build, and operate successfully within the DeFi arena, however it progresses.

After reading this book, you should also have ideas of what works in DeFi and what doesn’t, where risks lie, and where you are comfortable operating and even innovating. Users need to know what questions to ask developers when considering new protocols, and many need the knowledge contained in this book to understand what to ask—or if the protocols even make sense or are just failures that haven’t operated long enough to fail.

Tutorials are great for working through specific needs, but a fundamental understanding of these core concepts is needed to allow teams to build correctly and compliantly—two things sorely missing in the current and already failed protocols in DeFi.

About the Author

Alexandra Damsker is an experienced securities attorney, having trained at the US Securities and Exchange Commission and international firm Mayer Brown, as well as running a very successful solo practice with clients in eight countries grown entirely by referral and word of mouth. She is a 2x founder (one exit), and has been involved in blockchain since 2016. She is considered a subject matter expert in blockchain best practices, cryptocurrency, NFTs, DeFi, and general token offerings. She currently serves as legal, operations and strategic advisor to a number of organizations and high net worth individuals, including A-level celebrities and high growth, venture-funded companies.

Mrs. Damsker is a well-regarded speaker on regulatory issues and strategy in the blockchain industry, speaking to a wide array of organizational clients and conferences. These include NASDAQ, the LendIt Fintech conference, the PG Gaming conference, a fintech securities conference in Copenhagen, an official Davos World Economic Forum event, the Opal private and family office conference, the Association of Independent Music Producers, the Fintech and Financing Conference 2021, the Securities and Tokenization Summit, SOURCE Nashville, and an array of smaller talks. Her regulatory views in the area have been published in American Banker, among other publications.