This chapter contrasts the utilities of DEXs and CEXs, outlining their respective advantages. It also examines a range of risks associated with DEXs, encompassing private and public key vulnerabilities, smart contract risks, liquidity concerns, centralization, network, and token risks. Additionally, the chapter provides insights into the Total Value Locked in DeFi and DeFi liquidity.
This section delves into the distinction between private keys and seed phrases for wallet security. It guides users through the process of setting up wallets, including popular options like Metamask, Ledger, Trust Wallet, Coinbase Wallet, and custom paper wallets. By covering these topics, readers can make informed choices to safeguard their digital assets.
This section explores both off-chain and on-chain order book systems. It discusses off-chain order books using examples like DyDx, rollups, and private Layer 2 solutions. Then, we discuss Automated Market Makers (AMMs), Uniswap, and liquidity aggregators. Lastly, we examine the features and functionalities of both on-chain and off-chain order book systems, providing a comprehensive view of their differences and benefits.
This segment delves into AMMs, elucidating the roles of liquidity providers, exchange users, and protocols. It covers Impermanent loss, liquidity pools, asset types, and reward mechanisms while addressing explicit costs. Additionally, it contrasts distinctive AMM models like Uniswap V2 and V3 in a tabulated comparison, providing a comprehensive grasp of AMM dynamics.
Uniswap is introduced as a paradigm of the Constant Product Market Maker, spotlighting the UNI token. It also outlines steps on employing Uniswap with Metamask, furnishing a step-by-step guides.
This section provides a comprehensive understanding of Uniswap's mechanisms. It covers essential processes like trade execution, liquidity addition, migration and removal, farming, flash swaps, and more. Additionally, it addresses potential challenges such as fake tokens, impermanent loss for liquidity providers, rug pools, sandwich attacks, phishing incidents, and other relevant issues.
Curve Finance is introduced along with its operational mechanism, complemented by visual aids. The section provides step-by-step guidance, including screenshots, on using Curve. It highlights the Curve Token (CRV) and explores the distinctive liquidity pools on the platform. The concept of Curve Wars is explained, and the chapter concludes with instructions on initiating Yield Farming within the Curve Finance ecosystem.
The Balancer is presented alongside a visual representation of its mechanics. The guide provides step-by-step instructions, accompanied by animations, on utilizing Balancer. The mechanics encompass swaps and various pool types, including Weighted Pools, Composable Stable Pools, Boosted Pools, Liquidity Bootstrapping Pools, Linear Pools, Managed Pools, and Protocol Pools. This section also covers aspects like pool configuration, deployment, and key features within the Balancer platform.
