History of DeFi - Assignment

DeFi 101 Course 2021
#82

The term DeFi originated in 2018 during a telegram chat with developers.

I believe an important protocol will be built in the future to deal with loss of assets for someone that has past away and the assets will be available for their heirs.

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#83

  1. Everyone knows that DeFi means Decentralize Finance, but… is there any other meaning? Searching around, in the urban dictionary I found the term “Defy” (with “y”) means defying your opressor. That led me think if that’s an alternative subtle meaning. Common people now are able to defy the corrupted and exclusive practices of big finance like banks, fed, central banks, etc. Originally there were other proposed names such as “Open Finance” and “Crypto Finance”, but a group of companies of San Francisco in early 2018 saw themselves inmense in a movement that were Dfying Tradition. Is it just a mere coincidence???

  2. Other events that should be covered:

Terra Luna Labs and UST stablecoin were big news one week ago. It was so far the biggest catastrophe in crypto, and second (after MtGox) that impacted relatively the industry. It deserves a whole lecture to understand what happened and were the flaws of this project were.

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#84

I always found that conexion. DeFi also means “Defiance”

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#85

It sounds interesting that world real assets can be tokenized. Tokenization of Bitcoin itself is a big thing

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#86

More recent event is the birth and subsequent death of DeFi 2.0. This idea was a response to the issue of mercenary capital in DeFi. It allowed protocols to own their own liquidity. Examples include Olympus & Wonderland.

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#87

Where did the term Defi originate? Be as detailed in your explanation as you’d like

  • The start of Defi is when Bitcoin was first created. It allows for the money (bitcoin) to be transferred anywhere in the while in a safe, fast, and decentralized manner.
  • The real Defi as we know it today, really started when Ethereum was conceived and enabled money to be programmable. The Ethereum program language Solidity allows for the creation of token and developers really ran with it creating numerous decentralized financial projects that allow trading, lending, borrowing, etc. Maker protocols come to mind with its DAI stable coin. There are many others as well such as Uniswap, Sushiswap, Compound, and the like.

Find an important event or protocol that I didn’t mention, but that you think is important to be recorded in the history of Defi. Then explain why it should be included and check out what other community members have added. None of us are as smart as all of us so let’s work together on this.

  • This year May 2022, the collapse of Terra Luna alongside its stable coin UST comes to mind. The market manipulation by a huge institution (rumored to be BlackRock) sensing market weakness in the Terra Luna and UST ecosystem causes it to collapse epically within a couple of days bringing down the whole crypto market with it.
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#88

  1. Apparently from a conversation of EVM devs in 2018, composed of devs from Set Protocol, 0x and Dharma.

  2. A lot of great projects launched, and many felt like they’d be here for the long run. Sadly, 2021 was the year of ponzinomics. Node protocols, such as Univ and others, all failed miserably after weeks of massive profits and clones. Yield farming protocols, such as Goose and its forks, also failed miserably as an overinflated mess. Now even Olympus and all of its forks are going straight to 0. Sadly, many projects are noteworthy, but DeFi in 2021-2022 was a massive failure.

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#89

my own History of DeFi:
the birth of decentralized finance (wave 0) started with anarchist that name themselves as cypherpunks:
the main idea of these folks: Timothy May, Eric Hughes and John Gilmore back in 1993 is to fight for privacy and get away with control from government and big corporations; the substance of the discussion is cryptography and its social implications. (some people consider any of these guys is Satoshi)
Cypherpunk Manifesto
more and more enthusiast added into the thread and email discussion to find "social practices that aren’t controlled by centralized entities.
although @pmgoff has well accepted version but very much an insider one I will add my own research:

1st wave of Defi started with the creation of bitcoin in 2009:
creation of the blockchain, facilitate peer-to-peer transfers of digital asset btc
the digital asset is a non-sovereign, meaning there is no government or company ruling this asset (not centralized)
bitcoin is a source to store value and do P2P
2nd wave of Defi started with Ethereum creation (2015):
besides what BTC can offer Ethereum adds the programmability of money using the power of supercomputers to build intelligent contracts (solidity - programming language for smart contracts)
3rd wave started with many finance ideas converted in application running on and Ethereum ecosystem with the ETH coin offering in 2017
4th wave is where all maker, compound, uniswap and other interesting application started to find centralized financial services that can be decentrazlied: lending/borrowing, exchanges, insurance,.

a new event or protocol: in 2022
definitely besides all scams and ponzi schemes or outages I will put Terra Luna -
as we know programmable money is not perfect - and stablecoins can loss their peg.
an algorithmic stablecoin has to be backed “properly” with fiat money or bitcoin or anything with current value
avoid death-spirals; find better collaterized ways and create a great mathematical scheme to prevent an under-collaterized asset to depeg or fail.

1148×610

here is the best explanation on how to attack UST peg alogrithmic stablecoin I have found:
the attackers might have now what do about a death-spiral of TerraLuna
https://www.youtube.com/watch?v=UD6Icx9Uqks
more details to
https://grayscale.com/whats-happening-to-ust/

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#90
  1. Where did the term DeFi originate? Be as detailed in your explanation as you’d like
    The term DeFi was coined in an August 2018 Telegram chat, between entrepreneurs and developers of Ethereum. The individuals involved were Inje Yeo of Set protocol, Brendan Forster of Dharma and Blake Henderson of Ox.

2.Find an important event or protocol that I didn’t mention, but you think is important to be recorded in the history of DeFi. Then explain why it should be included and check out what other community members have added. None of us are smart as all of us so let’s work together on this.
An event that I felt important to the DeFi space, was smart contracts or the idea was brought forth by Nick Szabo back in the 1990s before the eventual birth of the Blockchain and Bitcoin. Vitalik Buterin in 2012 borrowed and applied Nick Szabo’s idea to the Bitcoin Blockchain creating Ethereum, the foundation for many of todays Decentralized protocols.

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#91

  1. The DeFi was originated by a chat conversation between Eth dev. & entrepreneurs.

  2. There was a Coin named Terra Luna. But the stablecoin from them decoupled and because of that it went literally to zero. Now there is Terra 2.0…

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#92

The term Defi originated from a group chat conversation between various Ethereum developers.

Defi 2.0 was a term coined to describe a new wave of protocols that gained popularity in late 2022 including Olympus DAO, Tokemak and Alchemix. The term has already fallen out of use as the so called “innovations” turned out to be nothing burgers, some were even outright ponzi schemes.

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#93

The term originated in a conversation between Eth devs in 2018.

The failure of UST stands out as a major recent event. The fact that the stablecoin was backed by an unstable asset (btc) allowed for gaps between the market cap of UST, and the amount that could actually be honored. As soon whales saw this weakness, they pounced by selling a large amount that ultimately led to a depeg, and a collapse of the whole ecosystem. This should be an important lesson for defi developers. It is crucial to make sure that assets are fully backed at all times. Of course, this will lead to slower growth of the network, but it will be more sustainable. Otherwise, it won’t take long for a bank run to ruin the whole ecosystem.

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#94
  1. The term DeFi, short for decentralized finance, was born in an August 2018 Telegram chat between Ethereum developers and entrepreneurs including Inje Yeo of Set Protocol, Blake Henderson of 0x and Brendan Forster of Dharma.
  2. NFT and DeFi Games were created and became a huge thing around the world especially with the Manager-Scholar system. This was a huge boom in the year 2021 and as of 2022 it is crashing down along with the whole stock system probably part of the cause is the war of Ukraine and Russia.
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#95

1.makerDAO
2. the collapse of luna terra. and algrythmic stable coins in general. Its a learning experience i think needs to be explained and told.

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#96
  1. Where did the term DeFi originate? Be as detailed in your explanation as you’d like

The term DeFi, short for decentralized finance, was born in an August 2018 Telegram chat between Ethereum developers and entrepreneurs including Inje Yeo of Set Protocol, Blake Henderson of 0x and Brendan Forster of Dharma. They were discussing what to call the movement of open financial applications being built on Ethereum.

  1. Find an important event or protocol that I didn’t mention, but you think is important to be recorded in the history of DeFi.

Oasis - in the early days

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#97

pmgoff explained very well about DeFi term, big respect for that)

But I would add Curve Finance and how it played a very importnant role to notice problems that coming with UST and Terra Protocol, it helped a lot of people to notice problem early and get out. So it shows benefits of transparency in DeFi. In TradFi and banks you would never know this early

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#98
  1. DeFi started with Maker and ETH
  2. I think the current events in the market will be looked back upon as a crossroads on where DeFi is headed and can therefore be marked as a historical event.
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#99

  1. DeFi started with Maker Protocol that launched in 2017 on Ethereum.

  2. Death of UST stables & terra blockchain is most likely going down in history for failed DeFi

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#100

The term DeFi was born in a telegram chat between Ethereum developers

Another important event or protocol is Defi moving into the realm of NFTs

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#101

  1. Defy originated in a telegramchat between eth developers and entrepreneurs in august 2018.

  2. Chainlink - The Chainlink Network helps secure tens of billions of dollars within the DeFi ecosystem by connecting hybrid smart contracts with high-quality data and off-chain computation.

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