Decentralized Finance (DeFi) Opportunities and Risks (Coursera)

The course begins with the most obvious risk: smart contract risk. Smart contracts are foundational for DeFi. The code of these contracts is public - opening a clear attack vector for hackers. That is, in traditional finance, hackers need to break into a system to get access to the code and data. In DeFi, everything is open source.There are many other risks studied including: Governance risk; Oracle risk; Scaling risk; Decentralized Exchange or DEX risk; Custodial risk; Environmental risk; and Regulatory risk.

What You Will Learn

- A framework to evaluate DeFi risk; Environmental implications of cryptocurrency; and winners and losers in the future of finance.

Course 4 of 4 in the Decentralized Finance (DeFi): The Future of Finance Specialization.

Syllabus

WEEK 1

Smart Contract Risk

The first model explores both logic errors and economic exploits that characterize smart contract risk. We then focus on some specific exploits including the Yearn.finance exploit that utilized a massive flash loan.

WEEK 2

Governance, DNS, Oracle, DEX and Custodial Risk

The second model explores additional risks including governance attacks, DNS attacks, oracle vulnerabilities, and DEX risk. The module ends with an exploration of the different types of custodial arrangements and the risks that each approach creates.

WEEK 3

Scaling Risk

Scaling risk is one of the biggest risks facing DeFi. Current capacity of the Ethereum blockchain is only about 15 transactions per second whereas the Visa network is 65,000. This module explores potential solutions to the scaling problem.

WEEK 4

Regulatory and Environmental Risk

The final module explores the regulatory risk that the DeFi space faces from KYC/AML to the potential declaration that some DeFi tokens are securities. Central bank digital currencies are also explored. We then explore the environmental impact of Proof of Work consensus and the migration to the environmentally friendly Proof of Stake.

Winners and Losers