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DeFi and the Future of Finance
During the Global Financial Crisis in 2008, our financial infrastructure failed. Governments bailed out the very institutions that let the economy down. This episode spurred a serious rethink of our financial system. Does it make any sense that it takes two days to settle a stock transaction? Why do retailers, operating on razor thin margins, have to pay 3% for every customer credit card swipe? Why does it take two days to transfer money from a bank account to a brokerage―or any other company? Why are savings rates miniscule or negative? Why is it so difficult for entrepreneurs to get financing at traditional banks? In DeFi and the Future of Finance , Campbell R. Harvey, Ashwin Ramachandran and Joey Santoro, introduce the new world of Decentralized Finance. The book argues that the current financial landscape is ripe for disruption and we are seeing, in real time, the reinvention of finance. The authors provide the reader with a clear assessment of the problems with the current financial system and how DeFi solves many of these problems. The essence of DeFi is that we interact with peers―there is no brick and mortar and all of the associated costs. Savings and lending are reinvented. Trading takes place with algorithms far removed from traditional brokerages. The book conducts a deep dive on some of the most innovative protocols such as Uniswap and Compound. Many of the companies featured in the book you might not have heard of―however, you will in the future. As with any new technology, there are a myriad of risks and the authors carefully catalogue these risks and assess which ones can be successfully mitigated. Ideally suited for people working in any part of the finance industry as well as financial policy makers, DeFi and the Future of Finance gives readers a vision of the future. The world of finance will fundamentally be changed over the coming decade. The book enables you to become part of the disruption – not the target of the disruption.
208 pages, Hardcover
First published August 19, 2021
About the author
Campbell R. Harvey
9 books6 followersCampbell Russell "Cam" Harvey (born June 23, 1958) is a Canadian economist, known for his work on asset allocation with changing risk and risk premiums and the problem of separating luck from skill in investment management. He is currently the J. Paul Sticht Professor of International Business at Duke University's Fuqua School of Business in Durham, North Carolina, as well as a research associate with the National Bureau of Economic Research in Cambridge, Massachusetts. He served as the 2016 president of the American Finance Association.
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Displaying 1 - 30 of 65 reviews
November 7, 2021
As someone interested in Crypto for years and started learning about DeFi in 2020, this book gives insights in a structured manner. It makes it easy for someone new to learn about all the different types of projects without having to filter through online clickbait articles.
If you are interested in DeFi and want a fundamental understanding of this market, this would definitely be beneficial to you.
If you are interested in DeFi and want a fundamental understanding of this market, this would definitely be beneficial to you.
September 20, 2021
The argument was lost, particularly in the 60 odd pages detailing the mechanisms of all the major DeFi projects. These are super complex ideas, but this was not an easy read, particularly if you're not already intimately familiar with crypto and finance. I wish the authors had spent more time tieing everything back to the premise of open markets.
Plus the paper it was printed on was really glossy, which confused me.
Plus the paper it was printed on was really glossy, which confused me.
September 30, 2021
This book is good. It is a short book but it is well written and the perfect premier for those who have some knowledge about cryptos and blockchain, and are interested in learning more about DeFi.
January 1, 2023
Gets very complex to follow very fast. Sometimes I wonder if it's a way to show people that the material is so complex, so they don't bother trying to understand and assume it's something real that smart people understand.
February 8, 2022
A good short book that goes into many of the basic concepts of DeFi as well as introductions to curve, dxdy, compound, arbitrum, uniswap, MakerDAO, Yield among others. Some of the descriptive text examples that are given are quite confusing as written. However, they all include diagrammatic explanations of the same functionality which together with the text make clear the intent of the examples. Would recommend to those who want a good general overview of DeFi.
August 28, 2021
Provocative and instructional introduction to a new paradigm in finance, commerce and the democratization of economic exchange. Timely and well sourced, the lead author’s prescience and accurate track record with regards to economic predictions lends credibility to his review of this emerging field (cryptocurrency).
December 7, 2021
Not for those not already familiar with blockchain, cryptocurrency, and defi. Topics are inadequately discussed. The book is poorly organized. Cheerleading the evolution of defi, not really an introduction to defi.
February 7, 2022
This is basically a 300-level course on the decentralized finance revolution. It is seemingly aimed at investors already well-versed in traditional finance. It features deep dives into MakerDAO, Aave, Uniswap, Yield Protocol, dYdX, and Synthetix, as well as a succinct yet superb overview of the history, infrastructure, strengths, and weaknesses of the industry.
For an investor experienced with the intricacies of traditional finance, this little book might be everything needed to get started. But for a novice looking for simplification, this book might raise more questions than answers.
Although I’m primarily in the latter camp, I appreciated learning about DeFi from an insider perspective. I have confidence that something I learned here will contribute to future earnings. I just wish the examples chosen were more practical and accessible to retail investors from other sectors.
Here is what I took away from the book in a nutshell.
Pros: DeFi differs from traditional finance in the following ways: it’s permissionless, open access, global, composable (interoperable), and transparent. It allows anyone to benefit from the censorship resistance, self-sovereignty, and instant accessibility of cryptocurrency while preserving their purchasing power. DeFi minimizes the friction of the inefficiencies that plague traditional finance while maximizing the value to users.
Cons: DeFi stability is threatened by several factors which can be categorized as follows: smart contract risk, governance risk, oracle risk, scaling risk, DEX risk, custodial risk, environmental risk, and regulatory risk. None of these risks are new to crypto investors, but the authors share their unique insight on each factor. I was especially shocked to learn about the legal front-running practices within DeFi.
For an investor experienced with the intricacies of traditional finance, this little book might be everything needed to get started. But for a novice looking for simplification, this book might raise more questions than answers.
Although I’m primarily in the latter camp, I appreciated learning about DeFi from an insider perspective. I have confidence that something I learned here will contribute to future earnings. I just wish the examples chosen were more practical and accessible to retail investors from other sectors.
Here is what I took away from the book in a nutshell.
Pros: DeFi differs from traditional finance in the following ways: it’s permissionless, open access, global, composable (interoperable), and transparent. It allows anyone to benefit from the censorship resistance, self-sovereignty, and instant accessibility of cryptocurrency while preserving their purchasing power. DeFi minimizes the friction of the inefficiencies that plague traditional finance while maximizing the value to users.
Cons: DeFi stability is threatened by several factors which can be categorized as follows: smart contract risk, governance risk, oracle risk, scaling risk, DEX risk, custodial risk, environmental risk, and regulatory risk. None of these risks are new to crypto investors, but the authors share their unique insight on each factor. I was especially shocked to learn about the legal front-running practices within DeFi.
July 13, 2022
Comprei esse livro imaginando que fosse algo sobre Bancos 4.0, a disrupção no sistema financeiro pela entrada das fintechs, mas acabei num livro sobre sistema financeiro descentralizado pela introdução das criptomoedas e principalmente pelo blockchain. Foi uma surpresa agradável. Como não sabia quase nada sobre o assunto, aprendi bastante. Não deixa de estar ligado diretamente ao assunto de disrupção do sistema financeiro e não só bancário.
De acordo com Fred Ehrsam Co-founder and Managing Partner, Paradigm Co-founder, Coinbase : "DeFi é um acrônimo fofo para “finanças descentralizadas”, mas ofusca seu verdadeiro potencial: um novo sistema financeiro construído do zero. Embora o DeFi seja pequeno hoje – contendo, no momento em que este artigo foi escrito, dezenas de bilhões de dólares em ativos em relação às centenas de trilhões do sistema financeiro tradicional – ele está crescendo rapidamente.
O DeFi é único em relação ao sistema financeiro tradicional porque é sem permissão, de acesso aberto, global, aberto a contribuições e transparente.
Não são mais necessárias instituições centralizadas para ações financeiras básicas. No DeFi, você pode ser seu próprio banco e obter crédito de código em uma blockchain - nenhuma instituição é necessária!"
E ele termina: "DeFi, como a internet, provavelmente tornará os serviços financeiros mais baratos, rápidos, seguros, personalizados e muito mais. Se o YouTube aumentou a amplitude do conteúdo de vídeo em ordens de magnitude porque era gratuito e fácil para qualquer pessoa criar e usar vídeos, o que o DeFi fará pelos produtos financeiros, pois permite que qualquer pessoa crie e use qualquer coisa a um custo quase zero?"
Obviamente viajei grandão em vários termos porque sou usuário de criptomoedas e muito menos investidor. Mas passei a realmente me interessar depois desse livro. Não em investir, mas sim em entender.
De acordo com Fred Ehrsam Co-founder and Managing Partner, Paradigm Co-founder, Coinbase : "DeFi é um acrônimo fofo para “finanças descentralizadas”, mas ofusca seu verdadeiro potencial: um novo sistema financeiro construído do zero. Embora o DeFi seja pequeno hoje – contendo, no momento em que este artigo foi escrito, dezenas de bilhões de dólares em ativos em relação às centenas de trilhões do sistema financeiro tradicional – ele está crescendo rapidamente.
O DeFi é único em relação ao sistema financeiro tradicional porque é sem permissão, de acesso aberto, global, aberto a contribuições e transparente.
Não são mais necessárias instituições centralizadas para ações financeiras básicas. No DeFi, você pode ser seu próprio banco e obter crédito de código em uma blockchain - nenhuma instituição é necessária!"
E ele termina: "DeFi, como a internet, provavelmente tornará os serviços financeiros mais baratos, rápidos, seguros, personalizados e muito mais. Se o YouTube aumentou a amplitude do conteúdo de vídeo em ordens de magnitude porque era gratuito e fácil para qualquer pessoa criar e usar vídeos, o que o DeFi fará pelos produtos financeiros, pois permite que qualquer pessoa crie e use qualquer coisa a um custo quase zero?"
Obviamente viajei grandão em vários termos porque sou usuário de criptomoedas e muito menos investidor. Mas passei a realmente me interessar depois desse livro. Não em investir, mas sim em entender.
January 29, 2022
Finance and crypto are complex subjects. This book does an excellent job at breaking down sophisticated innovations happening in DeFi, in a concise way.
The book opens with a compressed primer on the history of finance, technological innovations in finance (Fintech), and cryptocurrency.
After explaining the infrastructure of DeFi in an understandable way, the authors go on to argue that DeFi solves for 5 main issues in traditional finance:
1. Centralized Control
2. Limited Access
3. Inefficiency
4. Lack of Interoperability
5. Opacity
The bulk of this book is in Chapter 6, where several major DeFi applications are outlined. It illuminates how these apps function, deliver value to users, and solve for the 5 previously mentioned problems of traditional finance.
Lastly, the book transparently outlines the many risks that exist in the DeFi landscape today: custodial, oracular, governmental, regulatory, etc. This book does not shy away from the fact that DeFi is in its nascent stage of life, yet it bestows the reader with an understanding of its promising possibilities.
My favorite sentence comes in the concluding paragraph: "Savings rates increase and borrowing costs decrease as the wasteful middle layers are excised."
In the end, DeFi is an incredible innovation that aims to increase financial freedom in the world and is an ambitious aspiration worth pursuing.
I would recommend this book to both any finance professional or any technologist that has a familiarity with financial concepts.
The book opens with a compressed primer on the history of finance, technological innovations in finance (Fintech), and cryptocurrency.
After explaining the infrastructure of DeFi in an understandable way, the authors go on to argue that DeFi solves for 5 main issues in traditional finance:
1. Centralized Control
2. Limited Access
3. Inefficiency
4. Lack of Interoperability
5. Opacity
The bulk of this book is in Chapter 6, where several major DeFi applications are outlined. It illuminates how these apps function, deliver value to users, and solve for the 5 previously mentioned problems of traditional finance.
Lastly, the book transparently outlines the many risks that exist in the DeFi landscape today: custodial, oracular, governmental, regulatory, etc. This book does not shy away from the fact that DeFi is in its nascent stage of life, yet it bestows the reader with an understanding of its promising possibilities.
My favorite sentence comes in the concluding paragraph: "Savings rates increase and borrowing costs decrease as the wasteful middle layers are excised."
In the end, DeFi is an incredible innovation that aims to increase financial freedom in the world and is an ambitious aspiration worth pursuing.
I would recommend this book to both any finance professional or any technologist that has a familiarity with financial concepts.
July 16, 2022
This book takes a look at the emerging industry of Decentralized Finance which solves multiple problems of the current financial system. The book describes the problems that DeFi solves for the current financial system as:
1. Inefficiency
2. Limited Access
3. Opacity
4. Centralized Control
5. Lack of Interoperability
Then the book describes the solutions that DeFi offers and gives examples on them.
Since I do not have a deep background in the financial system tools like derivative, synthetics, perpetual futures, etc., I faced some a problem in understanding the solution the Synthetix, Yield Protocol, and dYdX offer.
Even though, this book gave a clear explanation of most of the ideas of DeFi using diagrams and figures which was a of great benefit.
In the last chapter, the book describes the risks that face DeFi which are divided into:
1. Smart contracts risks
2. Governance risks
3. Oracle risks
4. Scaling risks
5. DEX custodial risks
6. Environmental risks
7. Regulatory risks
This is a helpful playlist that explains a lot of the chapters of the book made by one of the book’s authors(Harvey Campbell):
https://youtube.com/playlist?list=PLE...
1. Inefficiency
2. Limited Access
3. Opacity
4. Centralized Control
5. Lack of Interoperability
Then the book describes the solutions that DeFi offers and gives examples on them.
Since I do not have a deep background in the financial system tools like derivative, synthetics, perpetual futures, etc., I faced some a problem in understanding the solution the Synthetix, Yield Protocol, and dYdX offer.
Even though, this book gave a clear explanation of most of the ideas of DeFi using diagrams and figures which was a of great benefit.
In the last chapter, the book describes the risks that face DeFi which are divided into:
1. Smart contracts risks
2. Governance risks
3. Oracle risks
4. Scaling risks
5. DEX custodial risks
6. Environmental risks
7. Regulatory risks
This is a helpful playlist that explains a lot of the chapters of the book made by one of the book’s authors(Harvey Campbell):
https://youtube.com/playlist?list=PLE...
This entire review has been hidden because of spoilers.
August 1, 2022
Finance, is something I am gradually learning about; there is a stack of CFA I-III books sitting on the couch --I wanted to have some sense, of the motivation, and mental/perceptual framework, used by individual in the field-- This was somewhat insightful in that regard, especially the Ethereum extensions, to the original cryptocurrency design. The sense is that "vested interest" given the high "dollar" amounts, drive much of this area. From "The Raffles Group", a comment perhaps on the stock market, to applications of the heavily marketed "Bitcoin" and "NFT"- we have this. Much like an attempt including crypto in banking, it is uncertain, if the infrastructure is solid "enough", to support these applications. The security of crypto-exchanges, the propensity of these systems to favor anonymity, which could probably be corrected, without much difficulty, is the center, of contention- money "laundering", being the primary concern. An eye opener, for me. (DISCLAIMER: I may have had some unusual hand, historically due to some happenstance, in development of the algorithms, in the distributed ledger and "NFT" technology. The "trademarks", are not mine, nor the "Bitcoin".)
January 11, 2022
This is a great 101 book on decentralized finance. The authors were able to explain the defi primitives with phenomenal clarity. It covers a surprisingly wide range of concepts in a short book, from the basics of blockchain design, to the high level mechanics of complex contracts like Synthetix, to oracle attacks.
No code is involved. Also there is very little math except for some basic algebra when several protocols are explained.
The materials are updated as of 1H21 - so none of the "DeFi 2.0" protocols were included (which is not a big problem).
The only pushback I have is that the book is too short (~150 pages). That said, the language is very concise and there is not a lot of redundant materials - so at least it's worth every minute. I think it is a worthwhile read.
No code is involved. Also there is very little math except for some basic algebra when several protocols are explained.
The materials are updated as of 1H21 - so none of the "DeFi 2.0" protocols were included (which is not a big problem).
The only pushback I have is that the book is too short (~150 pages). That said, the language is very concise and there is not a lot of redundant materials - so at least it's worth every minute. I think it is a worthwhile read.
March 23, 2022
Es exactamente lo que propone el título. No entra en explicaciones sobre la tecnología blockchain, la filosofía Bitcoin ni nada parecido (para eso hay otros muchos libros) y se centra en la red Ethereum, que es en la que se basan la mayoría de las tecnologías de las finanzas descentralizadas. Podría ser un libro de texto de los futuros estudiantes de economía descentralizada, con un amplio y actualizado (si eso es posible en este mundo tan cambiante) catálogo de herramientas DeFi.
Ojo, no es un libro para principiantes, se adentra inmediatamente en temas bastante complicados, y seguramente te vas a perder, pero es un estupendo y organizado resumen de muchas horas de vídeos explicativos que he visto de forma muy dispersa en YouTube. Lo dicho, un manual para guardar y releer.
Ojo, no es un libro para principiantes, se adentra inmediatamente en temas bastante complicados, y seguramente te vas a perder, pero es un estupendo y organizado resumen de muchas horas de vídeos explicativos que he visto de forma muy dispersa en YouTube. Lo dicho, un manual para guardar y releer.
December 6, 2022
This book isn’t accessible for a true novice, but does a decent job of laying the groundwork for someone who already has basic familiarity. Two major issues, though: First, in spending so much time detailing particular projects, the book itself will easily become outdated, and in fact, already is in many respects. Second, and more fundamentally, by focusing on the details, it often loses sight of broader arguments on use cases. It’s pretty easy to read this book and come away thinking that defi is just a means of making money, rather than how it can be used in finance. More real world examples of use, rather than just yield farming, would help with that.
April 27, 2023
Solid intro to what's coming now and next.
The edition I have published in 2021 is already dated in some ways. (E.g., the book talked about Ethereum Proof of Stake coming soon... and things like that.) But the core philosophical aspects are solid. And the explanations of a variety of protocols and what they might mean in terms of how they work is enlightening. Even if some of those have changed over time, the description of the architectures of the protocols is useful for leaning how these things are structured in general.
I found it relatively accessible with a basic knowledge of typical retail investor level finance info and basic understanding of blockchain tech as well.
The edition I have published in 2021 is already dated in some ways. (E.g., the book talked about Ethereum Proof of Stake coming soon... and things like that.) But the core philosophical aspects are solid. And the explanations of a variety of protocols and what they might mean in terms of how they work is enlightening. Even if some of those have changed over time, the description of the architectures of the protocols is useful for leaning how these things are structured in general.
I found it relatively accessible with a basic knowledge of typical retail investor level finance info and basic understanding of blockchain tech as well.
August 9, 2023
This is a good book if you want to understand DeFi and get some valid criticisms of traditional finance.
The reason for the average review is that the book doesn't live up to the latter part of the title. Look, we're in the pioneer/wild west days of DeFi. Given that the book aims to cover the future of finance, then I'd expect it to deliver a clear explanation of what problems DeFi will solve and how. Instead, when it tries to go there, it becomes a DeFi polemic. For example, the conclusion section is just 3 pages and very vague. Again, it's a good book to understand DeFi and the challenges it faces in 2023, but it isn't more than that.
The reason for the average review is that the book doesn't live up to the latter part of the title. Look, we're in the pioneer/wild west days of DeFi. Given that the book aims to cover the future of finance, then I'd expect it to deliver a clear explanation of what problems DeFi will solve and how. Instead, when it tries to go there, it becomes a DeFi polemic. For example, the conclusion section is just 3 pages and very vague. Again, it's a good book to understand DeFi and the challenges it faces in 2023, but it isn't more than that.
June 4, 2022
This book has some great content, but I gave it a low score because its layout and organizational structure was poor. It is difficult to read because they jump right into the details of processes within Crypto and do not tie it to the bigger picture of how this feature affects the investor.
It was like reading a dictionary, which is great if you’re looking to understand a definition, but they need something to tie it all together. I did like their post on the risks of smart contracts, but I wish it was a bit more polished.
It was like reading a dictionary, which is great if you’re looking to understand a definition, but they need something to tie it all together. I did like their post on the risks of smart contracts, but I wish it was a bit more polished.
May 5, 2023
I chanced upon this book at the local library, and it seems to be an easy read. It’s quite slim, with fewer than 200 pages, and from a quick browse, it does not seem very technical, with mainly words and few graphs or complex mathematical formula (if you have some ideas about blockchain and crypto, you will know that it’s a very mathematically heavy area, with lots of technical work the deeper you dig down into the core technology). All in all, probably an easy read...
https://my-view.blog/2023/04/19/book-...
https://my-view.blog/2023/04/19/book-...
January 6, 2024
While I have worked or taught Finance for decades, I am not familiar with DeFi, and listened to the audiobook version to increase my knowledge. The book was well narrated by David De Vries, however the book seemed to have multiple lists of topics throughout and tons of jargon, so it made it hard to follow. At times, for me, the book was almost incomprehensible, with the topics and words being used.
Not sure who the intended audience for this book is or the purpose for which it was written.
Note: the audiobook is just under 4 hours at normal speed.
Not sure who the intended audience for this book is or the purpose for which it was written.
Note: the audiobook is just under 4 hours at normal speed.
October 27, 2021
You hear enough about cryptocurrency these days, that I thought maybe it would be good to learn a little more about it, because I just don’t get it.
But by the end of the book, I’m not sure I understand it any better, and perhaps even less if that is possible.
To me I still think I’d prefer to own a tangible physical asset. Something I can hold in my hand. Something like … oh, I don’t know. Maybe tulip bulbs.
But by the end of the book, I’m not sure I understand it any better, and perhaps even less if that is possible.
To me I still think I’d prefer to own a tangible physical asset. Something I can hold in my hand. Something like … oh, I don’t know. Maybe tulip bulbs.
November 24, 2021
Far from an easy read, given the numerous technical details contained in the book, but the examples do add some much needed clarity. The topic is extremely interesting and the authors cover a lot of ground in a relatively short text, so I would only recommend this book to a reader which has already a vast understanding of the workings of finance. If you meet these criteria, you will surely like this book
March 15, 2022
Decent intro to defi if you are new to the topic. This book will turbo charge your learning curve. There are a few things starting to get dated in the book, but overall it's still current. Read it soon to get up to speed. I found chapter VI, DeFi Deep Five, very well presented. The chapter outlines the functionality of the leading protocols on Ethereum. This chapter will save you hours reading white papers.
June 4, 2022
If you are new to Defi I would not make this my first book. It is largely about Ethereum blockchain, NFTs, smart contracts. These are all assets built on Erhereums blockchain. I would read an entry level book first then make this my 2nd or 3rd book to see the wonderful future ahead of us. Once you see the utility of blockchain and other cryptoassets then read this book as it makes a case for a full overhaul of the traditional financial systems.
September 30, 2021
Great intro into the complexity (sooner than you think) today's financing system will or should be transitioning into Crypto as soon as possible. Explains complex stuff inside the blockchain and how nodes, farming, staking, work. Defi is a great overview and would heavily consider.
ESSENTIALLY, if you read this book, you can double your money using Crypto in a year or 100x it in the next 2o.
ESSENTIALLY, if you read this book, you can double your money using Crypto in a year or 100x it in the next 2o.
October 20, 2021
Complex but clear introduction to start. Hard to stay on top of everything for how quickly it all changes, even in months after it's published. Can't blame them but it does change environment for which it is read. Hope to continue to see more by the authors and I'd encourage wanting to read the first half, especially.
October 28, 2021
Wtf, es hat nicht geholfen das die Tabellen durch die Formatierung kaputt gegangen sind. Aber das Buch war sehr technisch und als erster tieferer Einstieg in das DeFi Thema war es extrem komplex. Ich würde sagen von allen Aussagen und Rückschlüssen in dem Buch konnte ich höchstens der Hälfte folgen, geschweige denn diese zu hinterfragen.
December 3, 2021
Small book that precisely discussed idea of DeFi and the implications/risk of some platforms/tokens. Could be a quick read if you have been in the crypto/DeFi area for a while. I wish it leads to more of how to research/differentiate coins potential instead of explaining the current existing coins. Would still recommend to people that are just dipping their toes in crypto.
April 3, 2023
This book is not aimed at a novice audience at all. It unfortuantely delves into very complext concepts very quickly. I felt this was a missed opportunity as it is an interesting sibhect and the author has an authoritative perspective of this subject matter. Worth reading if you're already intimately familiar with crypto, finance and alternative finance instruments.
October 11, 2021
dreadful technical book. good information - but mostly definational and some system description. probably would be better if I was actually interested in the deeply detailed information... I needed the cartoon version of this book.
Displaying 1 - 30 of 65 reviews