Decentralized Finance Protocol Analysis

Program Overview

Protocols covered

• Lending and borrowing platforms: interest rate models and collateralization
• Decentralized exchanges: constant product formula and liquidity provision
• Yield aggregators: automated strategy execution and fee structures
• Stablecoins: different collateralization approaches and failure modes
• Derivatives and synthetic assets: oracle dependencies and liquidation mechanics

Risk assessment framework

Smart contract risk

Code audit status, upgrade mechanisms, admin keys, and historical vulnerability patterns

Economic risk

Token incentive structures, liquidity depth, and sensitivity to market volatility

Composability risk

Dependencies on other protocols and cascade failure scenarios

Five weeks, 4 hours weekly with protocol interaction exercises

DeFi promises banking without banks, but the reality is more nuanced. This course dissects major protocol types: how Compound calculates interest rates algorithmically, what actually happens when you provide liquidity to Uniswap, and why leveraged yield farming can liquidate your position faster than you'd expect.

We work through real protocol documentation and smart contracts. You'll calculate potential returns accounting for gas costs, understand impermanent loss with actual numerical examples, and evaluate the security assumptions different protocols make. The focus is on risk assessment—what can go wrong and how often it has.

You'll examine several protocol exploits in detail, not to scare you away but to build realistic expectations. DeFi is genuinely innovative, but it's also experimental software handling real money. This course helps you tell promising protocols from disasters waiting to happen.