Decentralizing finance : how DeFi, digital assets, and distributed ledger technology are transforming finance.

Format:

Book

Author/Creator:

Bok, Kenneth.

Language:

English

Subjects (All):

Financial institutions--Effect of technological innovations on.

Financial institutions.

Financial services industry--Technological innovations.

Financial services industry.

Finance--Technological innovations.

Finance.

Digital currency.

Physical Description:

1 online resource (273 pages)

Edition:

1st ed.

Place of Publication:

Newark : John Wiley & Sons, Incorporated, 2023.

Summary:

"Kenneth Bok explores the current state of decentralized finance (DeFi). As distributed ledger technology (DLT) increasingly optimizes and democratizes financial ecosystems worldwide, this book serves as a guide to the most salient aspects of the ongoing transformation. The text delves into both crypto-native DeFi and DLT applications in regulated financial markets, providing: Comprehensive analysis of crypto-native DeFi across key areas such as its competitive landscape, infrastructure, financial instruments, activities, and applications; Coverage of key risks, mitigation strategies, and regulatory frameworks, analyzed through the perspective of international financial standard-setting bodies; Insight into how DLT is reshaping traditional financial systems through innovations like central bank digital currencies (CBDCs), tokenized assets, tokenized deposits, and institutional-grade DeFi platforms"-- Provided by the publisher.

Contents:

Cover Page

Title Page

Copyright Page

Contents

Acknowledgments

Glossary

Foreword

Introduction

I.1 Who Am I?

I.2 How This Book Is Organized

I.3 Scope of This Book

I.3.1 In Scope

I.3.2 Out of Scope

I.4 Disclaimers

I.5 Corrections

Part I Crypto-native DeFi

Chapter 1 What Is DeFi?

1.1 The Role of Intermediaries in TradFi

1.2 Definitions

1.3 Other Characteristics of DeFi

1.3.1 Interoperability / Composability

1.3.2 Transparency

1.3.3 Openness

1.3.4 Decentralized / Peer-to-peer

1.3.5 Unregulated

1.4 The DeFi Stack

1.5 Size of DeFi

1.6 Key Participants in DeFi

1.6.1 Developers and Entrepreneurs

1.6.2 Institutions

1.7 DeFi and FinTech

1.8 How Can I Try DeFi?

1.9 Where Does DeFi Meet TradFi?

1.9.1 Stablecoins

1.9.2 Central Bank Digital Currencies (CBDCs)

1.9.3 Real World Assets (RWA) and Tokenized Assets

1.9.4 Permissioned DeFi

1.10 What are the Risks of DeFi?

1.11 Chapter Summary

Notes

Chapter 2 Infrastructure and Instruments

2.1 The Infrastructure of DeFi

2.2 Basics of Blockchains

2.2.1 Components of Blockchains

2.2.2 Cryptography

2.2.3 Hash Functions

2.2.4 Public-key Cryptography and Digital Signatures

2.3 Bitcoin and Ethereum

2.4 Permissioned vs Public Blockchains

2.5 L1s and L2s

2.6 Accounts, Keys, Wallets, and Addresses

2.6.1 Accounts

2.6.2 Keys

2.6.3 Wallets

2.6.4 Addresses

2.7 Transactions

2.7.1 Block-by-block Settlement

2.7.2 Irrevocable

2.7.3 Composable

2.7.4 Atomic

2.7.5 Gas

2.7.6 Mempool / MEV

2.8 Smart Contracts

2.9 Clients and Nodes

2.10 Block Explorers

2.11 Custody

2.12 Oracles

2.13 RegTech

2.14 Identity

2.15 Bridges

2.16 DeFi Instruments

2.17 Stablecoins

2.18 Derivatives

2.19 Chapter Summary

Notes.

Chapter 3 Activities and Applications

3.1 Trading / DEXs

3.1.1 Automated Market Makers (AMMs)

3.1.2 Aggregators

3.2 Overcollateralized Lending / Borrowing

3.3 Governance / DAOs

3.4 Undercollateralized Lending

3.4.1 Uncollateralized Lending to Real-world Borrowers

3.4.2 Uncollateralized Lending to Crypto Institutions

3.4.3 Real World Assets

3.4.4 Centrifuge

3.4.5 MakerDAO and RWA

3.4.6 SocGen Pilots and MakerDAO Collaboration

3.4.7 Smart Bonds

3.4.8 Credit Scoring

3.5 Investing

3.5.1 Index Products - Spot

3.5.2 Index Products - Perpetual Futures

3.5.3 Dashboards

3.6 Payments

3.6.1 Crypto Payment Gateways

3.6.2 Big Payments and Crypto

3.6.3 Crypto Debit / Credit Cards

3.6.4 On-off Ramps

3.6.5 Solana Pay and Circle

3.6.6 Bitcoin Payments

3.7 Insurance

3.8 Prediction Markets

3.9 Chapter Summary

Chapter 4 Risks and Mitigation

4.1 Types of Losses

4.2 Basic Terminology

4.3 Endogenous DeFi Risks

4.3.1 Smart Contract Risks: Code Exploit Example: The DAO Hack

4.3.2 Economic Exploit Example: Mango Markets

4.3.3 Operational Exploit Example: Ronin Bridge Hack

4.3.4 CeFi Contagion / Systemic Risk

4.4 Exogenous DeFi Risks

4.4.1 Financial Stability

4.4.2 Pronounced Risks in Developing Countries

4.4.3 Banking-to-Crypto Concentration Risks

4.4.4 Stablecoins

4.4.5 Market Integrity

4.4.6 Frontrunning

4.4.7 Market Manipulation

4.4.8 Money Laundering, Funding of Illicit Activity and Terrorism

4.4.9 Consumer Protection

4.4.10 Disclosure, or the Lack Thereof

4.4.11 Data Protection

4.5 Chapter Summary

Chapter 5 Regulation

5.1 Introduction

5.2 Global Nature of Crypto and DeFi

5.2.1 How this Chapter Is Organized

5.3 What Regulators Want

5.4 Are Tokens Securities?

5.5 The Travel Rule.

5.6 Prudential Treatment of Crypto-asset Exposures

5.7 SSBs, United States and European Union

5.7.1 BCBS: Prudential Treatment on Banks' Crypto-asset Exposures

5.7.2 CPMI - IOSCO: PFMI and Stablecoins

5.7.3 IOSCO

5.7.4 FATF - AML / CFT

5.7.5 Survey of Jurisdictions on the State of Crypto-asset Regulation

5.8 European Union - MiCA

5.9 United States

5.10 DeFi Specific Regulation

5.10.1 DEXs

5.10.2 Stablecoins

5.11 Chapter Summary

Part II DLT in Traditional Finance

Chapter 6 Central Bank Digital Currencies

6.1 Introduction

6.2 Prologue: Libra

6.3 Role of the Central Bank

6.4 Structure of the Monetary System and a View Towards the Future

6.5 Central Bank Motivations and Considerations around CBDCs

6.6 Retail vs Wholesale CBDCs

6.7 Wholesale CBDCs

6.7.1 Domestic W-CBDCs

6.7.2 Bilateral W-CBDCs

6.7.3 Multilateral CBDCs (mCBDCs)

6.8 Case Study: Project mBridge

6.9 Retail CBDCs

6.10 Benefits and Risks of R-CBDCs

6.11 R-CBDC Design Choices

6.11.1 Nature of Claims and Role of the Central Bank

6.11.2 DLT or Conventional Centralized Ledger

6.11.3 Token- or Account-based Access

6.11.4 Cross-border

6.11.5 Holding and Transaction Limits

6.11.6 Interest Yielding

6.12 Types of R-CBDCs

6.12.1 Direct

6.12.2 Two-tier Models: Hybrid and Intermediated

6.12.3 Indirect / Synthetic

6.13 Examples of R-CBDCs

6.14 Case Study: Nigerian eNaira

6.15 Case Study: United States

6.16 Case Study: eCNY

6.17 Chapter Summary

Chapter 7 Asset Tokenization

7.1 What Is Asset Tokenization?

7.2 Benefits of Asset Tokenization

7.2.1 Efficiency Gains Due to Automation and Disintermediation

7.2.2 Enhanced Resilience

7.2.3 Transparency

7.2.4 Fractional Ownership

7.2.5 International Reach and Direct Access.

7.3 How is Tokenization Performed?

7.4 Considerations for Tokenization

7.5 DLT in Capital Markets

7.5.1 Primary Markets

7.5.2 Secondary Markets

7.5.3 Clearing and Settlement

7.5.4 Custody

7.6 Asset Servicing

7.6.1 Corporate Actions

7.6.2 Tax Withholding

7.6.3 Regulatory Reporting

7.7 Chapter Summary

Chapter 8 Deposit Tokens

8.1 What Are Deposit Tokens?

8.2 Benefits of Deposit Tokens

8.3 Deposit Token Projects

8.3.1 Regulated Liability Network (RLN)

8.3.2 Onyx by JP Morgan

8.3.3 German Banking Industry Committee

8.3.4 Swiss Banker's Association (SBA)

8.3.5 Other projects

8.4 Chapter Summary

Chapter 9 Institutional DeFi

9.1 Considerations for Institutions to Participate in DeFi

9.2 Institutional DeFi Examples

9.3 AMMs and FX

9.4 Considerations for AMMs and Tokenized Assets

9.5 Unified Ledger

9.6 Chapter Summary

Chapter 10 Conclusion

10.1 The Crypto-Fiat Innovation Dialectic

10.1.1 From Bitcoin to CBDCs

10.1.2 Can DeFi Advance Financial Inclusion?

10.1.3 DeFi as Global FinTech Sandbox

10.1.4 Cybersecurity

10.1.5 Moving Forward with Synthesis

10.2 Future Scenarios for DeFi: The Wild West, the Citadel, and the Bazaar

10.2.1 Path 1: Crypto-native DeFi / "Wild West"

10.2.2 Path 2: DLT-enabled TradFi / "Citadel"

10.2.3 Path 3: Crossover DeFi / "Bazaar"

10.3 The Future of Money

Bibliography and Online Resources

Index

EULA.

Notes:

Description based on publisher supplied metadata and other sources.

Other Format:

Print version: Bok, Kenneth Decentralizing Finance

ISBN:

9781394154982

1394154984

9781394154999

1394154992

OCLC:

1409592974