Decentralized finance | EPFL Graph Search

Are you an EPFL student looking for a semester project?

Work with us on data science and visualisation projects, and deploy your project as an app on top of GraphSearch.

Decentralized finance (often stylized as DeFi) offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a blockchain, mainly Ethereum. DeFi platforms allow people to lend or borrow funds from others, speculate on price movements on assets using derivatives, trade cryptocurrencies, insure against risks, and earn interest in savings-like accounts. DeFi uses a layered architecture and highly composable building blocks. Some applications promote high interest rates but are subject to high risk. Coding errors and hacks have been common in DeFi. Decentralized exchanges (abbreviated DEXs) are alternative payment ecosystems with new protocols for financial transactions that emerged within the framework of decentralized finance, which is part of blockchain technology and fintech. CEXs (centralized exchanges), DEXs and DEX aggregators are all built on the multi-layered DeFi architecture or components, where each layer serves a well-defined purpose. (See Figure: Multi-layered Architecture of the DeFi Stack). While they share common components of the first four layers, such as Settlement layer, Asset layer, Protocol layer and Application layer, DEX aggregators have an additional component or Aggregator layer, which allows them to connect and interact with other DEXs via smart contracts. The Ethereum blockchain popularized smart contracts, which are the basis of DeFi, in 2017. Other blockchains have since implemented smart contracts. MakerDAO is a prominent lending DeFi platform based on a stablecoin that was established in 2017. It allows users to borrow DAI, a token pegged to the US dollar. Through a set of smart contracts that govern the loan, repayment, and liquidation processes, MakerDAO aims to maintain the stable value of DAI in a decentralized and autonomous manner. In June 2020, Compound Finance, a decentralized finance protocol enabling users to lend or borrow cryptocurrency assets and which provides typical interest payments to lenders, started rewarding lenders and borrowers with a cryptocurrency called Comp.

About this result

This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.

Related concepts (20)

Related courses (3)

Related lectures (69)

FIN-413: Financial applications of blockchains and distributed ledgers

This course provides an introduction to Distributed Ledger Technology (DLT), blockchains and cryptocurrencies, and their applications in finance and banking and draws the analogies between Traditional

CS-234: Technologies for democratic society

This course will offer students a broad but hands-on introduction to technologies of human self-organization.

CS-438: Decentralized systems engineering

A decentralized system is one that works when no single party is in charge or fully trusted. This course teaches decentralized systems principles while guiding students through the engineering of thei

Cardano is a public blockchain platform. It is open-source and decentralized, with consensus achieved using proof of stake. It can facilitate peer-to-peer transactions with its internal cryptocurrency, ADA. Cardano's development began in 2015, led by Ethereum co-founder Charles Hoskinson. The project is overseen and supervised by the Cardano Foundation based in Zug, Switzerland. When launched in 2017, it was the largest cryptocurrency to use a proof-of-stake blockchain, which is seen as a greener alternative to proof-of-work protocols.

Web3 (also known as Web 3.0) is an idea for a new iteration of the World Wide Web which incorporates concepts such as decentralization, blockchain technologies, and token-based economics. Some technologists and journalists have contrasted it with Web 2.0, wherein they say data and content are centralized in a small group of companies sometimes referred to as "Big Tech". The term "Web3" was coined in 2014 by Ethereum co-founder Gavin Wood, and the idea gained interest in 2021 from cryptocurrency enthusiasts, large technology companies, and venture capital firms.

Financial Applications of Blockchains FIN-413: Financial applications of blockchains and distributed ledgers

Explores the financial applications of blockchains, including DeFi, lending protocols, DAOs, flash loans, and token-based insurance solutions.

Decentralized Finance: Lending Protocols FIN-413: Financial applications of blockchains and distributed ledgers

Explores DeFi lending protocols, interest rate models, AMM-based DEX mechanisms, and future research directions.

Blockchain Fundamentals FIN-413: Financial applications of blockchains and distributed ledgers

Explores the financial applications of blockchains, covering the definition, history, Ethereum, decentralized finance, smart contracts, tokens, assessment methods, challenges of double spending, digital signatures, and cryptographic hash functions.