{"repo":"AmirhosseinHonardoust/The-Physics-of-Defi","free":true,"listed":false,"github":"https://github.com/AmirhosseinHonardoust/The-Physics-of-Defi","clone":"git clone https://github.com/AmirhosseinHonardoust/The-Physics-of-Defi.git","description":"A deep exploration of the economic physics governing DeFi crashes, AMM decay, liquidity spirals, and liquidation cascades. This article models decentralized finance as a nonlinear system driven by invariants, thresholds, and feedback loops, revealing why crashes follow predictable laws of motion.","language":null,"stars":15,"topics":["amm","decentralized-finance","defi","economic-modeling","ethereum","financial-simulation","liquidations","liquidity","onchain-analytics","protocol-design"],"license":"MIT","category":"blockchain-web3","readme_excerpt":"The Physics of DeFi: Modeling Crashes, Liquidations, and AMM Decay Introduction, Why DeFi Behaves Like a Physical System Over the last several years, decentralized finance (DeFi) has grown from a small niche experiment to a multi-billion-dollar economic ecosystem. Yet despite this growth, the majority of analysis still treats DeFi as if it were simply “software with money built in.” In reality, DeFi behaves more like a physical system than a digital product. It is governed not by user interfaces, APIs, or DevOps practices, but by mathematical constraints, conservation laws, threshold effects, dynamic equilibria, and nonlinear feedback loops . The same way a bridge withstands weight until it reaches a critical load, a lending protocol remains healthy until price shocks push collateral below liquidation thresholds. The same way a thermodynamic system evolves under forces, an AMM continually adjusts its reserves to satisfy strict invariants that resemble energy conservation rules. And the same way a small shift in temperature can trigger a phase change, a slight downward move in asset prices can trigger cascading liquidations. To understand DeFi crashes, you cannot merely read Solidity code. You must simulate system behavior . This article explores the economic physics of DeFi protocols using a crash simulation engine, modeling how AMMs decay during price shocks, how lending pools collapse under leverage pressure, and how liquidity spirals propagate through the ecosystem. --- 1.","default_branch":null,"files":null,"tree":[],"storefront":"/r/AmirhosseinHonardoust","claimed":false,"request_supported":{"post":"https://gitbuyer.com/r/AmirhosseinHonardoust/The-Physics-of-Defi/request-supported","requests":0},"note":"indexed from public GitHub; nothing is for sale on this page. Clone it from GitHub. Paid listings live at /search."}