Financial Mathematics for Cryptocurrencies

Preface

Cryptocurrencies, and digital assets by extension, are stepping out of the shadowy corners of finance and going mainstream. What began as an ideological revolt against traditional banking institutions has become an instrument, like many others, to express one’s view on the market and manage their risk.

When I began my career in the City,¹ right after university, my first job offer was for a blockchain start-up. I decided then to go for a role in traditional finance (TradFi) and still have no regret. The decentralized finance (DeFi) industry, which represents digital assets in finance, had then a long way to go to mature and resolve systemic issues of corruption, money laundering, and other abhorrent malpractices. The air of rebellion and anti-establishment that was rife among the so-called “crypto bros” is slowly fading into a more measured, albeit daring, vision of what this new asset class can offer to investors and practitioners.

Digital assets are the promise that there is a new world beyond the digital frontier, one that allows for a comprehensive treatment of risk—without borders and excessive intermediation. This book is a message to fellow practitioners, in and outside DeFi, to continue to study, explore, and research this fascinating field.

As I write this book, I am not interested in settling the argument about the purpose of digital assets. Neither am I interested in promoting one ecosystem versus another. The fact is, cryptocurrencies are here and are mainstream. ...