FINAN-VIII Unit 5: Blockchain, Crypto, and DeFi
For the Digital Asset Evaluation assignment, you will choose one of the eight assets below and evaluate it across five dimensions: technical architecture, economic model, use case compared to a traditional instrument, adoption metrics, and risks.
Pick something you find genuinely interesting. You will be writing 2 to 3 pages about your chosen asset, so curiosity matters more than familiarity. Each profile below includes a brief overview, key metrics, and links to official documentation and recommended research sources.
All eight assets are well-documented and have enough public information for a thorough evaluation. You may not choose an asset outside this list without instructor approval.
The largest programmable blockchain and the foundation for most DeFi protocols, NFTs, and tokenized assets. Ethereum transitioned from Proof of Work to Proof of Stake in September 2022 ("The Merge"), reducing energy consumption by over 99%. Its smart contract platform enables developers to build decentralized applications without intermediaries.
Consensus: Proof of Stake (Casper FFG + LMD-GHOST)
A fiat-backed stablecoin issued by Circle, pegged 1:1 to the US dollar and backed by cash and short-term US Treasuries. USDC operates across multiple blockchains (Ethereum, Solana, Avalanche, and others) and serves as a primary settlement token in DeFi lending, trading, and payments. Circle publishes monthly reserve attestation reports from a major accounting firm.
Type: Fiat-collateralized stablecoin (centralized issuer)
The largest decentralized lending protocol by total value locked. Aave allows users to lend and borrow crypto assets through liquidity pools governed by smart contracts, with no bank or credit officer involved. Interest rates adjust algorithmically based on supply and demand within each pool. The AAVE token provides governance rights and can be staked to backstop the protocol's safety module.
Protocol Type: Overcollateralized lending/borrowing (pool-based)
The largest decentralized exchange by trading volume, built on Ethereum. Uniswap replaces traditional order books with an automated market maker (AMM) model: liquidity providers deposit token pairs into pools, and prices adjust algorithmically using a constant product formula. Anyone can trade or provide liquidity without registration, KYC, or intermediaries. Uniswap V3 introduced concentrated liquidity, allowing providers to allocate capital within specific price ranges.
Protocol Type: Automated Market Maker (constant product formula)
The dominant decentralized oracle network, providing real-world data (prices, weather, sports scores, random numbers) to smart contracts that cannot access external information on their own. Chainlink's price feeds secure over $20B in DeFi value, making it critical infrastructure for lending protocols, derivatives platforms, and stablecoins. The LINK token compensates node operators who retrieve and validate off-chain data.
Protocol Type: Decentralized oracle network (off-chain data aggregation)
The largest liquid staking protocol, holding roughly 28% of all staked Ethereum. Lido lets users stake ETH without running their own validator and receive stETH (staked ETH) in return, a liquid token that accrues staking rewards and can be used simultaneously in DeFi. This solves the liquidity problem of traditional staking, where assets are locked and unusable. The LDO token governs protocol parameters including node operator selection and fee structures.
Protocol Type: Liquid staking (pooled validator delegation)
A blockchain network designed specifically for fast, low-cost cross-border payments and asset tokenization. Stellar processes transactions in 3 to 5 seconds at a fraction of a cent per transaction, targeting remittances and financial inclusion in underbanked regions. The network uses the Stellar Consensus Protocol (SCP), a federated Byzantine agreement mechanism that prioritizes speed and low energy use over full decentralization. Major partnerships include MoneyGram and the UNHCR for aid disbursement.
Consensus: Stellar Consensus Protocol (Federated Byzantine Agreement)
The protocol behind DAI, the largest decentralized stablecoin. Unlike USDC (centralized issuer, fiat reserves), DAI is generated by users who lock cryptocurrency collateral into smart contract "vaults" and mint DAI against it. The system requires overcollateralization (typically 150%+), and liquidation mechanisms protect the peg if collateral values drop. MKR token holders govern risk parameters including collateral types, liquidation ratios, and stability fees. MakerDAO recently rebranded to Sky Protocol, though DAI and the underlying mechanics remain the same.
Protocol Type: Overcollateralized stablecoin (CDP-based, decentralized governance)