Blockchain, Crypto and DeFi

Unlock the future of finance with Blockchain, Crypto, and DeFi

Step into the realm of blockchain and cryptocurrency like never before with Blockchain, Crypto, and DeFi: Bridging Finance and Technology. Crafted by Marco Di Maggio, not just a Harvard Professor of Finance but an esteemed advisor to giants like Coinbase, this is your roadmap from foundational theories to cutting-edge applications. This is far from an academic discourse detached from reality; it seamlessly integrates theory with practice through detailed case studies and practical coding tutorials.

Navigating the digital landscape today demands more than just passing familiarity with the latest technologies. Delving deep into blockchain and cryptocurrencies has become a pivotal skill set for anyone looking to thrive in this constantly shifting digital era. Whether you're a student aiming for a career in finance and technology, an academic seeking to expand your knowledge base, or a professional looking to stay ahead of the curve, this textbook offers unparalleled insights into the mechanics and implications of blockchain technologies.

What Sets This Book Apart:

• Expertise Beyond the Classroom: Direct from the boards of the crypto world's titans, this book offers comprehensive coverage ensuring the book stands as an indispensable industry reference.
• Theory Meets Practice: Engage with complex blockchain concepts through practical case studies and coding tutorials.
• Learn, Build, Invest: Equip yourself to navigate the industry as an investor, entrepreneur, or innovator. Master the art of assessing protocols, crafting your own, and seizing opportunities in the blockchain and crypto space.
• Wit Meets Wisdom: Enjoy the journey with a narrative that combines profound insights with a witty tone, ensuring both enlightenment and entertainment.

Blockchain, Crypto, and DeFi is not just a textbook but a journey into the heart of digital finance, marked by Di Maggio's engaging style and deep expertise. Accompanied by additional online resources, including slide decks and tutorials, this book is your go-to resource and your gateway to mastering the blockchain revolution.

Embark on your blockchain adventure today.

Preface vii

Acknowledgments xv

Chapter 1 Chain Reactions: From Basement Miners to Blockchain Revolutionaries 1

Chapter 2 Ethereum: The “Windows” to the Blockchain Universe—Now Loading Smart Contracts and Oracle Magic 57

Chapter 3 Beyond Ethereum: A Gas- Guzzling Escape to the Holy Grail of Scalability 107

Chapter 4 Riding the Crypto Rollercoaster: How Stablecoins Keep Their Cool 181

Chapter 5 The CBDC Saga: Rewriting the Rules of Money 223

Chapter 6 Money Grows on Distributed Trees: The DeFi Forest of DAOs and DApps 259

Chapter 7 The AMM Time Machine: Back to the Future of Finance 309

Chapter 8 Liquidity Pools: Dive Deep into the Ocean of DeFi (Lifebuoys Not Included) 361

Chapter 9 The Tokenization Transformation from Wall Street to Your Street 399

Chapter 10 Digital Da Vincis: The Renaissance of Art in the Age of NFTs 445

Chapter 11 Regulatory Framework: Work in Progress 493

Chapter 12 Beyond HODL: Mastering the Art and Science of Crypto Trading 529

Chapter 13 Game Over for Bankers: The Unlikely Rise of Sofa-Surfing Capitalists 577

Chapter 14 Branding on the Block: How Blockchain Is Redefining Connections in the Web3 Era 617

Chapter 15 When HAL Meets Satoshi: Merging Minds and Money on the Blockchain 661

About the Author 703

About the Companion Website 705

Index 707

MARCO DI MAGGIO is a Full Professor of Finance at Imperial College Business School, and a faculty research fellow at the National Bureau of Economic Research. Before joining Imperial College, he was the Ogunlesi Family Professor at Harvard Business School. He holds a PhD in Economics from MIT.

A foremost expert on FinTech and market strategy, he has collaborated with numerous companies in multiple industries, from consumer lending to asset management and cryptocurrency markets, to raise capital, launch new products, deal with regulatory challenges, leverage customer data and design novel revenue models.

Professor Di Maggio’s current research focuses on how new technologies have disrupted financial markets and its effects on firms and individuals. As a gifted educator he developed courses on technology and finance tailored to MBAs, undergrads and graduate students, as well as, global executives and policymakers at Harvard Business School.

Professor Di Maggio’s work has been published in leading academic peer-reviewed journals such as the American Economic Review and The Journal of Finance, and widely cited by outlets such as the New York Times, Bloomberg, Forbes, The Economist, The Wall Street Journal, among many others.

Written by Marco Di Maggio, Professor of Finance at Imperial College Business School, Blockchain, Crypto and DeFi: Bridging Finance and Technology is a definitive resource on the rapidly evolving fields of blockchain technology, cryptocurrencies, and decentralized finance (DeFi) that expertly bridges academic theory with real-world applications and coding practices. In-depth Harvard Business School cases on Uniswap, Axie Infinity, and Facebook’s Libra, among others, are included throughout to illustrate the business and strategy decisions behind major protocols.

Most blockchain books fall into one of two traps: tech experts miss what really drives a protocol’s success, while business gurus often don’t get the tech’s nuts and bolts. This book breaks that mold, offering a rare blend of deep technical insight and sharp business acumen to give you the full picture.

This book serves as the ultimate reference guide—a comprehensive resource that caters to everyone, from the curious beginner to the seasoned professional. Whether you’re exploring the world of crypto for the first time, deeply involved in the industry, or an entrepreneur eager to build or invest, this book is your go-to resource.

Professor Di Maggio blends academic rigor with practical applications. Each chapter offers a balanced approach, featuring clear explanations of core concepts, hands-on coding examples to help you dive into the technical details, and real-world business cases that illuminate the new challenges and opportunities in this evolving space. This structure allows readers to not only grasp the concepts but also to get their hands dirty.

This book starts with the essentials of blockchain like Proof of Work and Proof of Stake, then progresses to advanced topics like layers 2, AMMs, and CBDCs. It also explores cutting-edge developments, including Zero-Knowledge proofs, tokenization, AI’s influence on crypto, and global regulatory frameworks.

Whether used as a textbook for students or a professional guide, Blockchain, Crypto, and DeFi: Bridging Finance and Technology offers both depth and breadth. Its thoughtful combination of theory, practical exercises, and real-world cases makes it an essential tool for anyone looking to understand and succeed in the future of finance and technology.

Praise for BLOCKCHAIN, CRYPTO AND DEFI

“Professor Di Maggio’s book uniquely bridges finance and tech with up-to-date HBS cases and coding examples. Each chapter takes you from concepts to applications, blending technical depth and business insights—a rare combination in blockchain literature, perfect for both engineers and finance professionals.”
—John Wu, President at Ava Labs, Venture Investor, Board Member

“Blockchain, Crypto and DeFi is the ideal textbook introduction to this subject. Comprehensive clear expert explanations of each important concept are delivered with loads of whimsy and practical knowledge. This is fun reading!”
—Darrell Duffie, Adams Distinguished Professor of Management and Professor of Finance at the Graduate School of Business, Stanford University

“Professor Di Maggio has been one of the most methodical and longstanding students of the emergence of blockchain, cryptocurrency and DeFi. Now he illuminates the pages of an important new book with years of insights on where crypto has been, currently stands and is likely going. No library on financial and emerging technology would be complete without this book.”
—Dante Disparte, Chief Strategy Officer and Head of Global Policy, Circle

“A comprehensive and practical guide to understanding the most important aspects in crypto. Marco demystifies this emerging technology and answers what so many want to know—how crypto works!”
—Adam White, Senior Advisor at Blackstone, Previously President and COO at Bakkt, and VP at Coinbase