Decentralized Finance (DeFi),

Stablecoins & NFT‘s

Peace Bello
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Outline
• Decentralized Finance

• Stablecoins

• Nonfungible tokens
(NFT’s)
Decentralized Finance
What is Defi?

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DeFi
• Decentralized finance (DeFi) builds on distributed ledger technologies
(DLT) to offer services such as trading, lending and investing without using
a traditional centralized intermediary.
• A range of DeFi protocols implements these services as a suite of smart
contracts, i.e., software programs that encode the logic of conventional
financial operations.
• Instead of transacting with a counterparty, DeFi users thus interact with
software programs that pool the resources of other DeFi users to maintain
control over their funds.
• The components of DeFi are stablecoins, software, and hardware that
enables the development of applications.
• The DeFi Stack is segmented into six distinct layers to better understand
these risks and dependencies; Layer 1: Blockchain, Layer 2: Network,
Layer 3: Protocol, Layer 4: Aggregation, Layer 5: Application, Layer 6: End
User

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Decentralized Finance Stack

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Decentralized Finance Stack
• The DeFi Stack brings together all the DeFi instruments layered one over the other.
The DeFi Stack is compound of multiple layers and each of one has its purpose.

• Level 1: Atomic Units of Value

It takes money to make money, and this says it all. This layer contains all the
needed tokens in the DeFi space like DAI, ETH, money market tokens (cTokens
and aTokens), centrally custodied ERC-20s, pegged assets and stablecoins
(USDT, USDC, WBTC, renBTC, tBTC).
• Level 2: The Transaction Layer
This ensures all transactional operations with the atomic units of value and
their need is explained by the complex DeFi systems. The simplified purpose is
to enable users to commit transactions on the chains, while optimizing
throughput, gas costs, latency or other transport variable.
• Level 3: Price Oracles
This ensures the market data with all the prices and the demand and supply
associated to that. Critical layer with the focus on security and verifiable inputs
as this holds the market value for all parties involved in any transaction.

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 Decentralized Finance Stack
● Level 4: DeFi Primitives
This is the place where we encounter the yield farmers or pure play Defi applications based on different finance
purposes. Following protocols are part of this layer where define the primitives of each instrument:
Lending protocols - Compound, Aave, Cream, bZx, Yield, Notional, Mainframe
AMM trading pools - Curve, Uniswap, Balancer, Bancor, mStable, BlackHoleSwap, DODO, Serum Swap
Order book exchanges - 0x, IDEX, Loopring, DeversiFi, Serum
Derivatives networks - MCDEX, Perpetual Protocol, DerivaDEX, Potion, Opyn, Synthetix, dYdX, Pods, Primitive,
BarnBridge
Asset management platforms - Set, Melon, dHEDGE

● Level 5: Protocol Aggregators

This takes care of all the primitive aggregators and provide smart contracts constructions that enable users to perform
the actual actions on the DeFi. Some samples in this regard are the following.
Supply-side aggregators: Yearn Finance, RAY, Idle Finance, APY.Finance, Harvest Finance, Rari Capital
Demand-side aggregators: 1inch, DEX.ag, Matcha, Paraswap
Aggregator of aggregators: yAxis
Novel aggregators: Swivel Finance, Benchmark

● Level 6: Wallets and Front Ends

This is the ultimate later on DeFi and allows to perform the operations over it and allow the end user interact with the
DeFi through specific interfaces.
Relayers: Tokenlon, Dharma, PoolTogether, Guesser
Wallets: Coin98, MetaMask, Math, imToken, Bitpie, Exodus, Trust Wallet
DeFi-Native Front ends: DeFi Saver, Zerion, Zapper, Argent, Instadapp

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Stablecoin

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Which stablecoin
are you most likely
to use to pack your
funds and why?

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 Answer
Celo dollar, because it’s not
volatile (pegged to the US dollar)

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Top 5 stablecoins by market capitalization by Coingecko

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Methods to achieve Stability of stablecoins
Algorithmic Stablecoins:
Fiat- may or may not hold
Crypto-
Collateralized Stablecoins: reserve assets. Their
Collateralized Stablecoins:
maintain a reserve of a fiat primary distinction is the
are backed by other
currency (or currencies) strategy of keeping the
cryptocurrencies. Because
such as the U.S. dollar, stablecoin's value stable by
the reserve
as collateral assuring the controlling its supply
cryptocurrency may also be
stablecoin's value. Other through an algorithm,
prone to high volatility, such
forms of collateral can essentially a computer
stablecoins are
include precious metals like program running a preset
overcollateralized i.e. ,the
gold or silver as well as formula. In some ways
value of cryptocurrency
commodities like crude oil, that's not so different from
held in reserves exceeds the
but most fiat-collateralized central banks, which also
value of the stablecoins
stablecoins have reserves of don't rely on a reserve asset
issued.
U.S. dollars. to keep the value of the
currency they issue stable.
Risks Associated with Stablecoins
• Fiat-collateralized stablecoins : Such reserves are maintained by independent
custodians and are regularly audited. Tether (USDT) and TrueUSD (TUSD) are
popular stablecoins backed by U.S. dollar reserves and denominated at parity to
the dollar.
• Crypto-collateralized stablecoins: A cryptocurrency worth $2 million might be held
as reserve to issue $1 million in a crypto-backed stablecoin, insuring against a 50%
decline in the price of the reserve cryptocurrency. For example, MakerDAO's Dai
(DAI) stablecoin is pegged to the U.S. dollar but backed by Ethereum (ETH) and
other cryptocurrencies worth 150% of the DAI stablecoin in circulation.
• Algorithmic stablecoins: The difference is that a central bank like the U.S. Federal
Reserve sets monetary policy publicly based on well-understood parameters, and
its status as the issuer of legal tender does wonders for the credibility of that
policy. Algorithmic stablecoin issuers can't fall back on such advantages in a crisis.
The price of the TerraUSD (UST)algorithmic stablecoin plunged more than 60% on
May 11, 2022, vaporizing its peg to the U.S. dollar, as the price of the related Luna
token used to peg Terra slumped more than 80% overnight.

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NGNT is backed by Nigerian Naira
Non-Fungible Tokens

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Significance of NFT’s

• Non-fungible tokens (NFTs) are assets that

have been tokenized via a blockchain. They
are assigned unique identification codes and
metadata that distinguish them from other
tokens.
• NFTs can be traded and exchanged for
money, cryptocurrencies, or other NFTs.
• It all depends on the value the market and
owners have placed on them. For instance,
you could use an exchange to create a token
for an image of a banana. Some people
might pay millions for the NFT, while others
might think it worthless.
Use cases of NFT’s beyond arts

1. Ensuring 3. Medical Records 4. Intellectual

Authenticity of 2. Real Estate and Identity Property and
Products Verification Patents

5. Academic
6. Supply Chain 7. Gaming Industry 8. Ticketing
Credentials

9. Artwork Tracking 10. Voting

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THANK YOU

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