DeFi Masterclass

Level: Intermediate Module Title: Explore the World of Decentralized Finance

🧠 What You’ll Learn:

• Overview of core DeFi components

• How decentralized exchanges and liquidity pools work

• What is yield farming and how to earn passive income

• Interacting with protocols like Aave, Compound, and Uniswap

📘 Lesson 1: Introduction to DeFi

DeFi, or Decentralized Finance, is a blockchain-based alternative to traditional financial services. DeFi apps use smart contracts to offer financial instruments without relying on intermediaries like banks or brokers.

Key elements:

• Open access

• Non-custodial

• Programmable assets

📘 Lesson 2: DEXes and Liquidity Pools

• DEX: A platform like Uniswap or SushiSwap where users trade directly from wallets

• AMM (Automated Market Maker): Uses formulas like x*y=k to price trades

• LP (Liquidity Provider): Supplies tokens to pools in exchange for a share of trading fees

📘 Lesson 3: Yield Farming

Yield farming is the practice of earning rewards (usually governance tokens) by staking or lending crypto assets.

Steps:

1. Add liquidity to a pool

2. Receive LP tokens

3. Stake LP tokens into a farming contract

Risks:

• Impermanent loss

• Smart contract exploits

📘 Lesson 4: Lending and Borrowing

Protocols like Aave, Compound, and MakerDAO allow users to lend crypto and earn interest or borrow against their holdings.

Example: Deposit DAI on Aave to earn APY. Borrow USDC using ETH as collateral. All handled via smart contracts, with interest rates based on supply/demand.