*** This course presents a journey from WoFi to WoFi. I.e., from World Financial Illusion to World Financial Inclusion. Today's financial world is an illusion, with many people excluded and unfairly treated. The fat cats failed to deliver what they should have. The long-awaited WoFi comes to rescue. ***
Decentralized Finance is more broad than DeFi. Decentralized Finance is unique from the origin: It is naturally decentralized and it stands on its own. In mandarin, it’s 正本清源。
Decentralized Finance, or World Financial Inclusion (WoFi) has multiple levels. At the core it’s about decentralized risk-taking, which is orthogonal to blockchain. The GME event is an example of decentralized risk-taking, which has nothing to do with blockchain. It has something to do with liquidity control. Some prerequisite knowledge on negative feedback systems will help.
Above decentralized risk-taking is decentralized governance. Decentralized governance involves trustless, permissionless, transparency, and composability. Composability is different from API linkage. The latter may not be transparent.
The decentralized core has to be connected to the oracle for real-world connection. The oracle serves as the ramp to the decentralized highway. The oracle’s prerequisite is probability/statistics. E.g., on-ramping a lot of data requires some knowledge on confidence intervals and so on.
At the lower level is decentralized record-keeping. Voting protocol is an example. Because students today are familiar with cloud editing on the same document by multiple parties, no prerequisite knowledge on this level is needed.
This course teaches the key field of Decentralized Finance. This course also has relationship with Berkeley’s Decentralized Finance course (https://berkeley-defi.github.io/f21).
Decentralized Finance has experienced an unprecedented growth, with hundreds of projects and a countless stream of financial, distributed systems, and blockchain innovations. [Reference: Berkeley’s “Decentralized Finance” course in 2021][https://berkeley-defi.github.io/f21]
The total value locked (TVL) in decentralized finance (DeFi) — a measure of the total value of assets committed to the DeFi ecosystem — has reached over $100 billion [https://www.defipulse.com].
We’ll first teach how to model Finance in a state-oriented programmable fashion. When compared to the traditional centralized finance (CeFi), WoFi offers products and services serving similar financial goals, but critically innovates with novel capabilities such as instantaneous multi-billion USD flash loans. By utilizing blockchain and smart contract technologies, WoFi as a whole aims to provide a new platform for programmable, automated finance services that remove the reliance on central trust and intermediaries.
We provide a framework to understand this new area of financial services. For each finance function, we will consider 1) the current intermediated structure, and then b) the WoFi version (actual or proposed) that fulfills the function. Is either one of these optimal? We will evaluate both through the lens of CS and finance.
3 critical questions are evaluated under the framework:
Is the application computable (efficiency, decidable), programmable (automatic)?
Is the application welfare-enhancing and stable (not a source of systemic risk)?
How do the new and old systems interact?
Given a novel and practical WoFi protocol (going through our evaluation), we further will capture the security danger in DeFi, as well as their impact on the underlying consensus security.
We hope to give an insight into how to program and structure secure and incentive-compatible WoFi applications.
Finally, the course draws experience from multiple groups of graduated students from our lab. Each has reached NT$2B in terms of profit. Their journey is illustrated partly via the leaderboard such as https://www.services.bitmex.com/app/leaderboard and so on. 這可能是台大產值最高的一門課了。