Date of Award

Spring 2022

Degree Type


Director of Thesis

Reid Tymcio

First Reader

Hugh Hoikwang Kim

Second Reader

Hugh Hoikwang Kim


Decentralized financial (DeFi) applications are a new generation of financial service applications, composed of coded smart contracts, and deployed on a blockchain network. These applications offer several methods of generating yield on deposited funds, much like a traditional bank. In this paper I provide a definition of several key terms and a breakdown of the primary mechanisms through which yield is generated. Additionally, I examine three of the main types of DeFi applications, the services they provide, and how they execute these services. I then provide an overview of four strategies involving cash and leverage and estimate the potential benefits and risks of each strategy. Finally, the risks involved with participation in the DeFi ecosystem are discussed.

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