Introduction to Stage 3
How Crypto recreates finance. Stablecoins, DEXs, liquidity, lending, yield, and perpetual contracts.
The questions this stage addresses
This is Part A's most substantial stage, and its most valuable.
What traditional finance built over centuries—money, market making, credit, and leverage—has been reimplemented on-chain in a few years. Some problems were solved, others changed form, and others grew larger.
This stage unpacks them one by one: how stablecoins become internet-native money, how AMMs quote prices without market makers, how overcollateralization replaces credit risk with price risk, who pays yield, and how leverage creates feedback loops.
Six chapters
Why has the internet never had native dollars?
Without a market maker in the middle, who sets the price?
Why can a token with a billion-dollar market cap crash after just $100,000 of selling?
Without credit checks, how can you lend to strangers?
Who pays for this APY?
What anchors a perpetual contract to the spot price if it never settles?
After this stage
Whenever you see a yield product, you ask who pays for it. Whenever you see a market cap, you ask how much can actually be sold.
Stage artifact: An analysis of a DeFi pool's yield sources, with on-chain data and a risk checklist.
Study suggestions
- Exercises involve real DeFi operations. Use only amounts you can afford to lose entirely. A few dollars to a few tens of dollars usually suffice.
- Experiment repeatedly with the simulators in chapters 16 and 18. Push collateral ratios and price drops to extremes to see when liquidation occurs. This teaches more than rereading definitions ten times.
- The course teaches mechanisms, not investment advice. That is especially true here.