Towards Decentralized Equilibrium Asset Trading Based on Blockchain

Abstract

The last decade has witnessed the explosive growth of digital tokens and cryptocurrencies including Bitcoin, reward programs and various tokens on Ethereum. However, trading these heterogeneous and non-financial digital assets often encounters substantial liquidity barriers due to the lack of interoperable standards, and faces an equilibrium dilemma in pricing strategies with a risk of market disequilibrium. In this sense, we introduce a novel decentralized equilibrium trading mechanism for assets across value systems with a combination of blockchain and economic theories that optimizes storage, equilibrium, and circulation of assets. To demonstrate the practical feasibility of the proposed mechanism, we design, implement, and evaluate an end-to-end prototype system on Ethereum platform with carefully-crafted smart contracts. Our extensive experimental evaluations and the trading simulation suggest that the proposed mechanism settles exchanges and tradings among different assets with equilibrium prices in a decentralized fashion, providing both practical and theoretical foundation for the autonomous equilibrium of asset trading market without human interventions.