0/ I'm often asked: how do you keep up with DeFi when it moves so fast?

My response: if you focus on learning a handful of core concepts, you'll be 80% there with 20% of the effort.

🧵The first 5 concepts you should learn in DeFi

veKen Deeter@puntium·7hReplying to @puntium1/ Standardized Tokens

The ERC20 standard defines how shadowy super coders can invent new types of tokens that are compatible with DeFi apps.

Read the original Ethereum Improvement Proposal from 2015: https://eips.ethereum.org/EIPS/eip-20

This API standard powers the entire token ecosystem.

2/ Synthetic stablecoins

@MakerDAO showed how to create stable, dollar-pegged, synthetic tokens using volatile assets as backing collateral.

The original whitepaper from 2017:

3/ Automated markets

@Uniswap showed how to create always-on, 24/7 trading markets based on a simple pricing algorithm and user-provided market-making capital.

The original Uniswap whitepaper:

3.1/ @CurveFinance showed that if you focus on automated market making for like-priced assets, then you can realize both pricing and capital efficiency.

Curve's whitepaper from 2019, describing "StableSwaps":

4/ Automated Lending

@compoundfinance and @AaveAave show how similar automated markets can let anyone be a borrower or lender.

Compound whitepaper from 2019:

Aave whitepaper from 2020:

5/ Automated Investment Strategies

@yearn showed how to create automated investment strategies that simplify DeFi investing down to a simple deposit

@AndreCronjeTech's medium post describing yearn v2 "vaults"

I love reading original whitepapers because they describe groundbreaking ideas in a world where there were no easy comparisons. True first principles thinking.

Understand these 5 concepts and you'll see most of DeFi is forking, remixing, and iterating on these ideas.

Like threads like this? Follow me at @puntium to keep learning about DeFi and web3.

In a future installment, I'll go through newer projects that are building a new set of essential money legos.