DeFi Handbook Edition 2

A Comprehensive Guide to Decentralised Finance

De: Voon Kiong Liew

Narrado por: Virtual Voice

When I first authored the DeFi Handbook in 2020, decentralized finance was still in its early stages of rapid expansion and experimentation. The industry was buzzing with innovation, new protocols, and groundbreaking financial models. However, as with any emerging sector, the landscape has since evolved dramatically. By 2021, DeFi had entered a phase of both growth and consolidation, with some platforms proving their resilience while others struggled against liquidity crises, regulatory scrutiny, and security vulnerabilities.

Several once-prominent DeFi platforms have since ceased operations. Celsius Network filed for bankruptcy in 2022, while Iron Finance suffered a dramatic token devaluation in 2021. Algofi, which was once the largest DeFi protocol on Algorand, wound down in 2023, and Radar Relay halted trading services due to regulatory uncertainties. bZx's Fulcrum fell victim to security breaches, leading to its downfall, while TotleSwap and Yeang Finance were unable to sustain operations. These examples highlight the challenges DeFi protocols face in maintaining liquidity, security, and compliance.
Despite these setbacks, many DeFi platforms have demonstrated resilience and adaptability. dYdX has solidified its position as a leader in decentralized perpetual contract trading. Balancer continues to innovate in automated market making, while Curve Finance remains a dominant force in stablecoin liquidity provision. Airswap persists as a key player in decentralized trading, and Tokenlon has maintained its role in decentralized exchange and payment settlement. Yam Finance has recovered from early difficulties, PoolTogether’s no-loss lottery model continues to attract users, and RenVM still plays a crucial role in cross-chain liquidity.

The DeFi ecosystem has also welcomed new entrants, adding further dynamism to the sector. World Liberty Financial, launched in 2024, aims to expand access to decentralized financial services. Synthetify offers synthetic asset trading on Solana, while Trader Joe has gained popularity as a decentralized exchange on Avalanche. PancakeSwap has emerged as a leading DEX on Binance Smart Chain, and Raydium enables high-speed token swaps and liquidity provision on Solana.

As DeFi continues to evolve, platforms must navigate an increasingly complex landscape shaped by market fluctuations, regulatory developments, and technological advancements. The second edition of this DeFi Handbook is not just an update but a reflection of the sector’s ongoing transformation. It aims to provide readers with a comprehensive understanding of DeFi’s progress, challenges, and future potential. Whether you are a newcomer or a seasoned DeFi participant, I hope this edition serves as a valuable resource in your exploration of decentralized finance.