Decentralised Finance, Blockchain, and Web3

BMAN75462 Decentralised Finance, Blockchain, and Web3 15 Semester 2 Postgraduate Taught Level 7 Aseem Pahuja Unit coordinator 1 FHEQ level (Framework for Higher Education Qualifications) ' Masters/Integrated Masters P4 ' European Credit Transfer & Accumulation System Rating : 7.5 This course unit explores the rapidly evolving landscape of Decentralized Finance (DeFi) and the broader cryptocurrency ecosystem. It provides a comprehensive understanding of key DeFi primitives such as lending, borrowing, decentralized exchanges, and governance, as well as associated technologies like stablecoins and NFTs (Non-Fungible Tokens). Through lectures, case studies, and group projects, students will analyse real-world applications and challenges, including systemic risks like liquidation risks and oracle risks.The course uses case studies such as Bored Ape Yacht Club and Compound to contextualize theoretical concepts and explore real-world applications. It culminates in a group project where students apply their knowledge to current issues in DeFi. The syllabus integrates reference books like DeFi and the Future of Finance by Harvey et al. (2021), scholarly articles, and recent case studies to provide a well-rounded view of the challenges and opportunities in DeFi.   This course unit explores the rapidly evolving landscape of Decentralized Finance (DeFi) and the broader cryptocurrency ecosystem. It provides a comprehensive understanding of key DeFi primitives such as lending, borrowing, decentralized exchanges, and governance, as well as associated technologies like stablecoins and NFTs (Non-Fungible Tokens). Through lectures, case studies, and group projects, students will analyse real-world applications and challenges, including systemic risks like liquidation risks and oracle risks.The course uses case studies such as Bored Ape Yacht Club and Compound to contextualize theoretical concepts and explore real-world applications. It culminates in a group project where students apply their knowledge to current issues in DeFi. The syllabus integrates reference books like DeFi and the Future of Finance by Harvey et al. (2021), scholarly articles, and recent case studies to provide a well-rounded view of the challenges and opportunities in DeFi.   The unit aims to:Examine the fundamental principles and applications of decentralized finance (DeFi). Drawing from recent research on blockchains, cryptocurrency, and decentralized governance, the unit will provide a set of analytical frameworks to enable students to assess the emerging DeFi systems and architectures, and the risks associated with them.Specifically, the unit aims to: 1. Equip students with the quantitative models and analytical tools they need to understand, analyze, and respond to the technical structures underpinning smart contracts, liquidity pools, decentralized exchanges, and automated market makers (AMMs). 2. Encourage students to critically explore the ways in which DeFi is used for lending, borrowing, swapping, and investing, and to assess its potential inefficiencies, risks, and contrasts with traditional financial systems such as centralized limit order books. 3. Enable students to develop practical skills in working with on-chain data to assess DeFi applications, and to use these skills to explore emerging markets in uncollateralized lending, stablecoins, and digital asset risk management.   Knowledge and understandingKU1       Explain the foundational components of decentralized finance (DeFi) and blockchain technology, including borrowing, lending, decentralized exchanges, stablecoins, and governance mechanisms (DAOs).KU2       Analyse the role and differentiation of cryptocurrencies, digital currencies, and central bank digital currencies (CBDCs), with a focus on their integration into DeFi ecosystems.KU3       Examine the technological foundations of DeFi, including blockchain, smart contracts, and non-fungible tokens (NFTs), and their impact on automation, transparency, and the creator economy.Intellectual skills         IS1         Analyse how DeFi protocols such as Compound, Aave, and Uniswap function, including their underlying mechanisms, benefits, risks, and the governance challenges posed by DAOs in decentralised decision-making.IS2         Critically evaluate the advantages and disadvantages of DeFi compared to traditional finance, with an emphasis on decentralisation, transparency, operational efficiency, and the potential for DeFi to reshape market structure, liquidity, and financial inclusion.IS3         Demonstrate skills in identifying systemic risks within DeFi, including liquidation, oracle, and governance vulnerabilities, and assess the financial stability risks of stablecoins, along with their potential contagion effects on traditional financial systems.Practical skills               PS1        Apply DeFi protocols for decentralised lending, borrowing, trading, and tokenization.PS2        Engage with DeFi  protocols safely, recognising their operational risks and mitigation strategies.                    Transferable skills and personal qualities     TS1         Substantiate analysis with theories and evidence. Syllabus (indicative curriculum content):Week 1:  Introduction to the unit.  Lecture:  DeFi Primitives (A) Tutorial: Campbell et al. (2021)Week 2:  Lecture:  DeFi Primitives (B) Tutorial: Campbell et al. (2021)Week 3:  Lecture:  Non-Fungible Tokens (NFTs)  Case Study:  Bored Ape Yacht Club: No More Monkey BusinessWeek 4:  Lecture: Decentralized Exchanges  Case Study:  Uniswap: Fighting a Vampire Attack (A)Week 5:  Lecture: DeFi Lending and Borrowing     Case Study: Compound: Lending on the BlockchainWeek 6:  Lecture: Stable Coins and Central Bank Digital Currency Case Study: Digital DollarsWeek 7: Lecture: DeFi Governance and DAOs Case Study: SuperRare: Turning an NFT Marketplace into a DAOWeek 8: Lecture: Liquidation and systemic risks of DeFi Case Study: Crypto Winter Buries Celsius Network and Batters DeFiWeek 9:   Lecture: DeFi RecapWeek 10:  Coursework clinic     Lectures combined with group discussions of case studies.Lectures: 20 hours Case Study Tutorials: 10 hours Guided independent study: 120 hours Total: 150   3 Report 100%  Case Study Analysis: In class, during case study analysis sessionsIndividual Report: After the end of the unit. Written feedback provided on CLE N Reference books: • Harvey, Campbell R., Ashwin Ramachandran, and Joey Santoro. DeFi and the Future of Finance. John Wiley & Sons, 2021. • King, B. Breaking banks: The innovators, rogues, and strategists rebooting banking. John Wiley & Sons, 2014. • Schar, Fabian, and Aleksander Berentsen. Bitcoin, Blockchain, and Cryptoassets: A Comprehensive Introduction. MIT press, 2020.  • Susanne Chishti, Tony Craddock, Robert Courtneidge, Markos Zachariadis (eds.) (2020). The Paytech Book : the Payment Technology Handbook for Investors, Entrepreneurs and Fintech Visionaries, Chichester, West Sussex ; Wiley, 2020. Case Studies: • As indicated in the Syllabus above.  Journal articles:  • Davoodalhosseini, M., Rivadeneyra, F., & Zhu, Y. (2020). CBDC and monetary policy (No. 2020-4). Bank of Canada. • Dodgson, M., Gann, D., Wladawsky-Berger, I., Sultan, N., & George, G. (2015). Managing Digital Money. Academy of Management Journal, 58(2), 325–333.  • Hachem, Kinda Cheryl, The Economics of Cryptocurrency. Darden Case No. UVA-GEM-0190, Available at SSRN: https://ssrn.com/abstract=3942633 • Kaczynski, S., & Duke Kominers, S. (2021). How NFTs Create Value. Harvard Business Review Digital Articles, 1–11. • Schär, F. (2021). Decentralized finance: On blockchain-and smart contract-based financial markets. FRB of St. Louis Review. • Uniswap (2022) docs.uniswap.org/Note: The recommended reading material is tentative, and will be amended in due course as and when more relevant and suitable material is available before the start of teaching.   Lectures 20 Tutorials 10 0 120