Second-Order Effects
We’re calling the next two sections “second-order effects.” This name comes from our mental model and framework we’ve been building for the course. Initially, we learned about the fundamental primitives underlying the blockchain world. Next, we saw how protocols tied those primitives together. Then, we saw how smart contracts introduce a way to create autonomous programs to operate within the trustless networks the protocols created.
In the next two sections, DeFi and DAOs, we’ll see the structures that emerge from the smart contract building blocks we’ve just learned about.
Please note, these are both very new and very specific fields. Some of the material may be overwhelming, but don’t worry! Our only goal is to give you a point of reference if you encounter these ideas in the wild. We also hope it will show you some of the interesting things that can happen when we start to blend the world of smart contracts with messy human existence.
While the next few sections are heavy on DeFi, please know that there is more to blockchain than DeFi! In fact, there’s a danger in getting caught up in the small world of DeFi and missing the larger elements of social coordination made possible by blockchain.
That’s why we’re also discussing DAOs, a topic that has more recently come into an interesting maturity. We’ll explore the ways in which DAOs are extending the reach of blockchain and, perhaps, social coordination.
Let’s dive in!