FA591 Blockchain Technologies & Decentralized Finance



Course Catalog Description

Introduction

The course will introduce concepts of Blockchain technologies as they apply to decentralized finance. The course starts with cryptocurrency and advances the concept of smart contracts as they apply to financial instruments. The course is technical and requires knowledge of programming in Python as well as financial instruments and concepts. Programming in solidity is learned throughout the class. The course discusses risk management concepts, stable coins as well as how regulations may impact the area.


Prerequisite: Knowledge of derivatives, markets and contracts acquired through FE620 or FE535 or FIN 628. Basic programming skills in Python, FE520. Instructor can assess prerequisites and override.

Campus Fall Spring Summer
On Campus X X
Online X X

Instructors

Professor Email
Ivan Bakrac ivanb.bakrac@gmail.com

More Information

Course Objectives

In this course students will be provided modern tools to understand web3 and blockchain applications. They will understand the differences and similarities between Crypto Decentralized Finance (DeFi) and Centralized Finance (CeFi) capital markets. The students will be capable to use solidity programming to introduce and develop smart contracts. Finally, the students will be capable of understanding principles of token engineering.

The main objective of this course is to provide a working understanding of blockchain and its applications to finance. Current courses lack the combination. They either provide understanding of blockchain technology focusing on cryptography and security or understanding the financial implications at an overview level.


Course Outcomes

After successful completion of this course, students will be able to:

  • Understand DeFi & CeFi crypto capital markets
  • Understand Solidity & smart contract fundamentals
  • Apply these concepts to design and develop blockchain solutions, token as well as DeFi trading applications

Course Resources

Textbooks

  • Harvey, Campbell R. and Ramachandran, Ashwin and Santoro, Joseph, DeFi and the Future of Finance, Wiley (2021)
  • Andreas M. Antonopoulos and Dr. Gavin Wood, Mastering Ethereum, O'Reilly Media, (2019)

Grading

Grading Policies

Description Weights
1 Class Participation & Attendance Students will be graded based on their regular attendance in class and participation in class discussions 30%
2 Individual Presentations Each student will lead the discussion and critique of a paper twice in a semester (15% each) 30%
3 Final paper and presentation students will work in teams to prepare a theory paper that captures an organizational phenomenon. 30% for paper and 10% for presentation

Lecture Outline

Week Crypto Learning Topics Key Financial Applications Technical Chapters & Quizzes
Week 1 Bitcoin Mechanics Bitcoin White paper Bitcoin White paper
Week 2 Ethereum: Decentralized Apps, EVM, and the Ethereum blockchain Intro to EVM & Ethereum
Ethereum, EVM, Smart Contracts
METH: Ch 1,2,13
Ethereum
Week 3 Introduction to Decentralized Finance Intro to DeFi
DeFi Infrastructure, DeFi Primitives
DEFI: Ch 1, 2, 3
Week 4 Programming in Solidity & Smart Contracts Fundamentals I Basics of Smart Contracts & Fundamentals I
Life Cycle of Smart Contract, Programming with Solidity, Building a Smart Contract with Solidity
METH: Ch 6,7,8
Solidity
Week 5 Programming in Solidity & Smart Contracts Fundamentals II Basics of Smart Contracts & Fundamentals II
Smart Contract Security & Audits, Risk Management: Traditional Risk Factors & DeFi Risk Factors
METH: Ch 9
DEFI : Ch7
Project 1 Due
Week 6 Decentralized Exchanges DEX
Uniswap & Liquidity Providing & Risk Factors
DEFI: Ch 6
Uniswap White Paper
Week 7 Staking Staking
Proof of Stake (POS) vs. Bitcoin Mining (POW)
DEFI: Ch 6
METH: Ch 14
Bitcoin Mining
Week 8 Lending Lending
DeFi Lending Strategies, DeFi Interest Rate Models
DEFI: Ch 6
Compound Protocol
Week 9 Scaling the blockchain: Optimistic Rollup, ZK, Other L1s Scaling Solutions
Zk Roll- Ups, Optimistic Roll Ups, Other L1 Solutions
Blockchain Trilemma
ZK Solutions
Week 10 Crypto Derivatives Introduction to Crypto DeFi & CeFi Derivatives
Protocol Derivatives, OTC Crypto Markets, Arbitrage
DEFI: Ch 6
Project 2 Due
Week 11 NFTs Non-Fungible Tokens
Introduction to Non-Fungible Tokens
DEFI: Ch 6
TBD Industry Speaker TBD
Week 12 Token Engineering Token Design & Airdrops
Introduction to Token Engineering & ERC Standards
METH: Ch 10
Week 13 CBDC & Stablecoins CBDC
Introduction to Central Bank Digital Currencies, Stablecoins, DeFi Stablecoins, Algo Stablecoins
DEFI: Ch 3
Maker DAO
CBDC Primer
Week 14 Regulation Regulation
Regulatory and Legal Frameworks
SEC Considerations Regulation of Crypto Assets Project 3 Due

Project Specifications

Projects will involve design of blockchain solution, token engineering & airdrop design, and programmable application for decentralized finance using solidity programming language


Objectives
  • Design blockchain infrastructure (Project1)
  • Design DeFi market applications using solidity (Project 2)
  • Design DeFi token or airdrop (Project 3)

PROJECT:

The project will focus on the development of a prototype for an AI/ML driven FinTech startup, with the final delivery comprising of two presentations. First, for the business case, discussing the business and financial applications of the technology, and second presentation discussing the technological prototype.

A proof-of-concept should be developed for the project, which is a working demo of the proposed system. The goal is to demonstrate that the technical aspects of the project are functioning.

The projects will be done with small teams of no more than three individuals.