Why (in italian perché) has always been my favorite word. Why, in my opinion, is the most powerful word we have, as it allows us to uncover the real essence of things. It is the key to understanding causality, one of the pillars of the scientific method. The goal of this post is to ignore buzzwords and a blind deterministic approach, which permeates crypto, and try and understand why DeFi...
The post describes the AMM model and its most important implementation in the DeFi ecosystem: Uniswap.
The main argument of the essay is that, in order to really become a mainstream product, DeFi lending will have to expand across two main dimensions: reputation and real world assets.
Last year, I wrote a post defining the most important component of a banking stack. This post is the complement to that one, and i describes the core elements of a modern lending stack, adding some new DeFi pieces to the architecture.