Blockchain Papers

Seth Oranburg

No abstract is available for this record.

Priti Aggarwal

Decentralized Finance ( DeFi ) has become one of the most disruptive technologies in the blockchain ecosystem with borderless, permissionless and programmable alternatives to traditional financial services. DeFi has grown as an ecosystem to allow people to lend, borrow, trade, and earn through the use of smart contracts and distributed ledgers, without requiring a centralized asset custodian. On the one hand, innovations are expected to further improve the transparency, efficiency, and financial inclusion of the industry; however, on the other hand, they pose a range of risks that question the stability and sustainability of the industry. Important issues that many people should know about relate to weaknesses in the code of smart contracts, risks of liquidity, governance assaults, and the influx of market volatility on users. Besides, the pseudonymous character of the blockchain transactions is characterized by concerns involved with fraud, money laundering and the risk of misuse of financial system. Concurrently, lack of harmonized regulation systems has created a disunified environment where regulation quality is either non-existent or highly variable along the lines of sectors. This presents a regulatory vacuum that not only makes risk management difficult, but also puts institutional adoption and long term integration in the mainstream finance into doubt. In contrast, the blistering pace of innovation in DeFi illuminates its potential to democratite access to capital, decrease transaction costs and transform globalfinancial infrastructures. In this paper, the critical nature of both rewards and risks inherent in DeFi and the current regulatory solutions to this issue and its weaknesses will be discussed. Withvention to further case study examples and potential governance solutions, the study seeks to answer the question of how DeFi can be developed in a sound and accountable manner. To sum up, the paper highlights that there is a need to have a balance of both protecting users, innovation and systemic resilience in an increasingly digital financial environment.

H. Y. Chen

Imagine being able to lend and earn interest without ever having to talk to a bank. That's the vision of Decentralized Finance (DeFi), a fast-growing area of finance that is built on blockchain and smart contracts. This paper discusses how lending sites like Aave, Compound, and MakerDAO work, and why clients from ordinary savers looking for high returns to institutions seeking clout are joining. We delve into the technology behind smart contracts, how they deal with risk using over-collateralization, and what motivates people to lend or borrow under this trustless system. But DeFi is not just a tech story-it's social too. It has the potential to disrupt traditional finance, open up access in underserved communities, and put a strain on global regulatory systems. But challenges of scalability, security, and restricting usage to crypto holders only also raise underlying questions. Drawing on a mix of on-chain data and user case studies, this paper further applies resilience theory to discover how DeFi responds to economic shocks compared to traditional banks. By doing so, it fills a key research gap in terms of the long-term economic contribution of DeFi. We offer policy proposals like undercollateralized lending programs and single point regulation, and argue that DeFi, if carefully constructed, can support goals like decent work and economic growth (UN SDG 8). There needs to be future work on what drives take-up and how DeFi could scale across blockchains and geographies to realize its potential.

Mathew Abraham

No abstract is available for this record.

Anthony Chidi Nzomiwu

Decentralized Autonomous Organizations (DAOs) have emerged as the de facto governance layer for major decentralized finance (DeFi) protocols and real-world asset (RWA) tokenization platforms, yet they operate in a profound legal and regulatory vacuum. Unlike traditional financial entities, DAOs lack formal legal personality, fiduciary duties, or mechanisms for regulatory accountability, despite managing assets estimated at $25 billion globally as of 2024. This research examines how DAOs are transforming financial governance and identifies the necessary regulatory adjustments to ensure investor protection, market integrity, and systemic resilience without compromising the core innovation of decentralized coordination. Through a mixedmethods approach-including governance mapping of 30+ financial DAOs, comparative legal analysis of emerging regulatory responses (from the EU's MiCA framework to Wyoming's DAO LLC statute), and semi-structured interviews with developers, regulators, and institutional participants-the study proposes a novel "functional equivalence" model for DAO regulation. This model grants legal recognition to DAOs when they engage in regulated financial activities, while preserving code-based autonomy in non-regulated functions. The research offers a pragmatic pathway toward aligning decentralized innovation with public accountability, filling a critical gap in both academic literature and policy design.

Saeid Ataei, Saeid Ataei, Shervan Ataei, Shervan Ataei · 5 authors

This study presents a comprehensive systematic review of Artificial Intelligence (AI) applications in DecentralizedFinance (DeFi), emphasizing AI’s pivotal role in mitigating the vulnerabilities and operational complexities inherentin permissionless financial systems. By systematically analyzing 39 peer-reviewed studies from major scholarlydatabases, the review identifies five dominant application domains: fraud detection, smart contract security, marketprediction, credit risk assessment, and decentralized governance. It examines the diverse range of AI methodsspanning machine learning, deep learning, graph neural networks, and reinforcement learning—and evaluates theircomparative performance and limitations. The findings reveal that AI not only enhances DeFi’s transparency, trust,and efficiency but also underpins emerging capabilities such as autonomous governance and adaptive marketmechanisms. Persistent challenges including data scarcity, cross-chain generalization, interpretability, andscalability—underscore the need for robust, explainable, and ethical AI solutions. The review concludes that AIconstitutes a foundational enabler for secure, transparent, and resilient decentralized financial ecosystems, andoutlines critical future research directions for integrating trustworthy intelligence into the evolving DeFi landscape. (PDF) A Systematic Review on the Application of Artificial Intelligence in Decentralized Finance. Available from: https://www.researchgate.net/publication/397514996_A_Systematic_Review_on_the_Application_of_Artificial_Intelligence_in_Decentralized_Finance [accessed Nov 11 2025].

Nataliia V. Fareniuk

This article explores the potential of investments in the cryptocurrency segment, focusing on the factors driving this resurgence, the evolving landscape of decentralized finance (DeFi), and the long-term prospects for investors. Decentralized finance has emerged as one of the most promising sectors within the cryptocurrency ecosystem. By leveraging smart contracts and blockchain technology, DeFi platforms offer financial services without intermediaries, enabling users to lend, borrow, trade, and invest with unprecedented ease and transparency. The year 2023 marked a significant turning point for the cryptocurrency market, as it emerged from what many had dubbed the "cryptowinter." The cryptowinter of 2022 was triggered by a combination of macroeconomic challenges, including rising interest rates, inflationary pressures, and the collapse of major crypto entities like FTX. This period, characterized by declining asset prices, reduced investor sentiment, and widespread uncertainty, tested the resilience of both the industry and its participants. These events led to a loss of trust among retail and institutional investors alike. However, as the cryptowinter waned, new opportunities began to surface, revealing the untapped potential of investments in the cryptocurrency segment. Yet, as 2023 unfolded, the market demonstrated remarkable recovery capabilities. Despite market downturns, institutions continued to explore blockchain technology. In 2023, we witnessed greater participation from traditional financial players, such as banks and hedge funds, who recognized the transformative potential of cryptocurrencies and DeFi.

Cong-Feng Wu, Walton Wider, Hao Wu, Qian Long Kweh · 6 authors

No abstract is available for this record.

Ali Farhani

No abstract is available for this record.

Rabail Adwani, V Sudhakar Rao

Decentralized Finance (DeFi) has emerged as a revolutionary paradigm in the global financial ecosystem, challenging the conventional banking systems by utilizing blockchain technology and smart contracts. This paper explores the rise of DeFi, its foundational principles, and its impact on traditional financial systems. DeFi eliminates the need for intermediaries such as banks, enabling peer-to-peer financial services such as lending, borrowing, trading, and asset management. By leveraging decentralized protocols, DeFi offers greater financial inclusion, transparency, and security, while providing users with complete control over their assets. The paper critically evaluates the advantages of DeFi, including reduced transaction costs, faster processing times, and the democratization of financial services. It also highlights the challenges and risks, such as regulatory uncertainty, scalability issues, and security vulnerabilities that could hinder widespread adoption. Furthermore, the review examines key DeFi applications, such as decentralized exchanges (DEXs), liquidity pools, and stablecoins, that are reshaping financial practices. While DeFi holds the potential to disrupt traditional banking by providing innovative alternatives, it also raises concerns related to market volatility and the lack of consumer protection. The paper concludes by reflecting on the future of DeFi, including its integration with mainstream finance and the regulatory frameworks that may shape its evolution. As DeFi continues to gain traction, understanding its potential and limitations is essential for policymakers, financial institutions, and participants in the global financial markets.

Francesca Carapella, Edward J. Dumas, Jacob Gerszten, Nathan Swem · 5 authors

No abstract is available for this record.

S.G. Valentinov

No abstract is available for this record.

Laxmi Raj Bhatta

Purpose: The present paper aims to analyse the new financial system related to cryptocurrency and its challenges. Methodology: This paper primarily employs a literature review and quantity methodology to elucidate the emerging financial paradigm, hindrances, and policy considerations. Findings: The findings indicate that cryptocurrency can transform the financial landscape. Moreover, the data reflects that the transactions of different cryptocurrencies are increasing. Conclusion: The global payment system is experiencing significant changes due to cryptocurrency and the implementation of blockchain technology. It contends with challenges like price fluctuations and security threats. Further research is needed to understand the implementation of cryptocurrency as a common currency and its effects. Keywords: Bitcoins, Cryptocurrency, Digital Economy, Blockchain technology, Peer to Peer and Bitcoin

Andrew Ifesinachi Daraojimba, Damodar Bihani, Grace Omotunde Osho, Julius Olatunde Omisola · 6 authors

Decentralized Autonomous Organizations (DAOs) represent a transformative innovation in financial governance, enabling community-owned and transparently operated structures through blockchain technology. This paper presents a conceptual model for integrating DAOs into the banking and financial services sector to promote equitable, trustless, and decentralized financial systems. Traditional banking frameworks often rely on centralized authorities, opaque governance, and profit-driven agendas that marginalize underserved populations. By contrast, DAOs offer a paradigm where smart contracts execute predefined rules without intermediaries, allowing stakeholders to participate directly in decision-making processes. The proposed model outlines a framework for community-owned banking, emphasizing the use of token-based governance, peer-to-peer lending mechanisms, automated interest rate adjustments, and decentralized reserve management. This system fosters financial inclusion by allowing unbanked and underbanked populations to access financial services through open and transparent digital platforms. Moreover, DAO-based financial governance ensures real-time auditability, accountability, and resistance to single points of failure—addressing critical vulnerabilities in conventional financial institutions. Through the conceptualization of a DAO-led Community Bank (DAO-CB), the paper demonstrates how decentralized finance (DeFi) primitives such as liquidity pools, stablecoins, and collateralized lending can be integrated with democratic governance models to create robust, community-led economic ecosystems. Legal, technical, and regulatory considerations are examined, with a focus on scalability, compliance, and user adoption challenges. The study argues that while DAO banking may not yet replace centralized financial institutions, it serves as a powerful complementary system, especially in regions with limited banking infrastructure or high levels of financial distrust. The research contributes to the growing discourse on decentralized finance and its real-world applications, offering insights into how DAOs can redefine ownership, control, and transparency in the financial sector. The conceptual model provides a foundation for future empirical studies and prototype development, encouraging stakeholders, developers, and policymakers to collaborate on building decentralized, equitable, and resilient financial ecosystems.

D. Khriashchova

Introduction. This article explores the emerging role and importance of decentralized finance (DeFi) within the global financial landscape. It analyzes how blockchain-based financial instruments are reshaping traditional financial services and creating new opportunities for inventors and users worldwide. Summary of the main results of the study. The study begins by examining the core principles of DeFi, including its decentralized nature, transparency, and programmability. It then delves into the various components of the DeFi ecosystem, such as decentralized exchanges, lending platforms, and yield farming protocols, explaining their functions and potential benefits. The author investigates the growth trajectory of DeFi is addressing inefficiencies in traditional finance, particularly in areas like cross-border transactions, access to credit, and financial inclusion for the unbanked population. Furthermore, the article also critically assesses the challenges facing DeFi, including regulatory uncertainties, smart contract vulnerabilities, and scalability issues. It explores potential solutions and ongoing developments aimed at overcoming these obstacles. This the research analyzes the impact of DeFi on established financial institutions and markets. It considers how traditional banks and investment firms are responding to the DeFi phenomenon, either by adapting their services or by integrating DeFi elements into their existing operations. The study concludes by projecting the future role of DeFi in the international financial market. It discusses potential scenarios for the coexistence or convergence of centralized and decentralized financial systems, and the implications for global economic stability and financial inclusion. Conclusion. This comprehensive analysis provides valuable insights into the transformative potential of decentralized finance and its growing significance within the broader context of the international financial market.

Nicolas Curchod, Bruno Pasquier

Liquidity pools are essential for the functioning of decentralised finance. Nevertheless, the legal issues they raise have found little attention in legal scholarship. This article explains how liquidity is provided in decentralised finance, as opposed to centralised finance, and introduces the relevant stakeholders (i.e., DEX operators, liquidity providers, and traders). Then, it explores the legal relationships between such stakeholders from a contract law perspective. Further, it discusses the options of users to seek compensation in case they incur damage in connection with the use of decentralised finance platforms. Finally, it sets out the limitations of the existing legal framework and the need for legislative action. -- Liquiditätspools sind für das Funktionieren des dezentralen Finanzwesens unerlässlich. Trotzdem finden die rechtlichen Fragen, die sie aufwerfen, in der Rechtswissenschaft nur wenig Beachtung. Dieser Beitrag erläutert die Art und Weise, wie im dezentralen Finanzwesen - im Gegensatz zum zentralen Finanzwesen - Liquidität bereitgestellt wird, und stellt die relevanten Akteure (d.h. Betreiber von dezentralen Börsen DEX, Liquiditätsanbieter und Händler) vor. Anschliessend werden die rechtlichen Beziehungen zwischen diesen Akteuren aus vertragsrechtlicher Sicht untersucht. Ferner werden die Möglichkeiten der Benutzenden erörtert, Schadenersatz zu verlangen, wenn ihnen im Zusammenhang mit der Nutzung dezentraler Finanzplattformen ein Schaden entsteht. Schliesslich werden die Grenzen des bestehenden Rechtsrahmens und der Bedarf an gesetzgeberischen Massnahmen aufgezeigt. -- Si les liquidity pools sont essentielles au bon fonctionnement de la finance décentralisée, les questions juridiques qu'elles suscitent n'ont trouvé que peu d'attention en doctrine. La présente contribution présente la manière par laquelle la liquidité est assurée dans la finance décentralisée, par opposition à la finance traditionnelle, et présente les acteurs pertinents (opérateurs d'échanges décentralisés DEX, fournisseurs de liquidité et traders). Elle expose ensuite les relations juridiques entre les différents acteurs sur le plan contractuel. Puis, elle examine les possibilités pour les utilisateurs ayant subi un préjudice dans le cadre de l'utilisation d'échanges décentralisés de demander la réparation du dommage. Enfin, elle expose les limites du cadre juridique existant et la nécessité d'une action législative.

Jodi Tommerdahl

This article offers a clear and approachable introduction to the evolving landscape of money and the frictions developing between traditional government control and decentralized finance (DeFi). Tailored for readers with a basic awareness of cryptocurrency but limited familiarity with its broader implications, the article demystifies DeFi by explaining its core concepts including blockchain, Centralized Bank Digital Currencies (CBDCs), and the historical role of government regulation of money through central banking. Against this backdrop, it examines the transformative potential of DeFi, emphasizing the growing tension between the centralized authority of governments and the decentralized ideals driving this new financial model. While governments seek to maintain stability and control, individuals increasingly gravitate toward the more affordable, efficient, and inclusive solutions promised by DeFi. Designed to empower readers with a better grasp of the forces shaping the future of finance, this article underscores the importance of understanding the delicate interplay between governmental oversight and decentralized innovation. As the digital economy expands, this dynamic struggle will influence not only economic policies but also person-al financial choices and access to resources.

Sofya G. Glavina

The forced digital transformation of the banking industry and monetary policy were a response to the growing trend of increasing adoption of decentralized finance. The transition from traditional, physical forms of money and payment systems to digital currencies and blockchain technology represents a significant shift in the financial landscape. This transition is characterized by the development of unique, nonreplicable assets, which define cryptocurrencies and other forms of digital assets. These assets are actively responding to the rapid changes in financial markets and represent a major development in monetary systems. The introduction of central bank digital currencies (CBDCs) represents a key event in this transformation, and their potential as monetary policy instruments should not be overlooked. Governments around the world are addressing the challenges of implementing these new currencies and ensuring their transparency, while also considering their potential benefits for economic stability. This study will explore the current state of CBDC development and its implications for the future of monetary systems. By analyzing the motivations for CBDC initiatives, the challenges of integrating these digital currencies into existing financial systems, and their implications for international payments, privacy, and security, this study reveals the multifaceted consequences of this technological development. The research is based on an examination of global CBDC projects, identifying successful implementations and the diverse approaches taken by various countries. Ultimately, this article emphasizes the importance of international cooperation and the establishment of a regulatory framework in order to benefit from the potential benefits of CBDC while mitigating the associated risks.

Remy Jonkam Oben, Fezile Özdamlı

The 2008-2009 global financial crisis resulted in a loss of trust in traditional financial systems and the need to decentralize and democratize finance. This coincided with the birth of blockchain technology, marked by creating the pioneer cryptocurrency, bitcoin (BTC), in 2009. As blockchain technology has gained prominence, decentralized finance (DeFi) has emerged, transforming the financial landscape and offering financial services without the need for traditional financial intermediaries. While the disruption of traditional finance has opened up new opportunities, it has also introduced significant risks to the financial sector. In this study, we follow the PRISMA approach (systematic literature review) to identify several DeFi benefits and challenges, as discussed in the existing literature. Based on the Scopus database, we critically scrutinized 64 published articles to report that although DeFi promotes financial inclusion and enhances financial transparency and accountability, the ecosystem also faces security issues, regulatory ambiguities, and price volatility. By providing a balance between the benefits and risks associated with DeFi, this study will help investors and other stakeholders make informed decisions and will serve as a valuable resource for formulating strategies to better regulate the DeFi ecosystem.

Rik Ghosh, Arka Datta, Aggarwal, Vidhi, Sudipan Sinha · 5 authors

Decentralized Finance (DeFi), a financial ecosystem without centralized controlling organization, has introduced a new paradigm for lending and borrowing. However, its capital efficiency remains constrained by the inability to effectively assess the risk associated with each user/wallet. This paper introduces the 'On-Chain Credit Risk Score (OCCR Score) in DeFi', a probabilistic measure designed to quantify the credit risk associated with a wallet. By analyzing historical real-time on-chain activity as well as predictive scenarios, the OCCR Score may enable DeFi lending protocols to dynamically adjust Loan-to-Value (LTV) ratios and Liquidation Thresholds (LT) based on the risk profile of a wallet. Unlike existing wallet risk scoring models, which rely on heuristic-based evaluations, the OCCR Score offers a more objective and probabilistic approach, aligning closer to traditional credit risk assessment methodologies. This framework can further enhance DeFi's capital efficiency by incentivizing responsible borrowing behavior and optimizing risk-adjusted returns for lenders.

Ms. Komal Assistant Professor

Decentralized Finance (DeFi) represents a trans formative innovation in the financial ecosystem, leveraging block- chain technology to provide decentralized alternatives to traditional financial services. This paper provides a comprehensive review of DeFi applications, including lending, decentralized exchanges, stable-coins, and asset management. Furthermore, it examines the associated risks, such as security vulnerabilities, regulatory uncertainties, and systemic risks. The findings underscore the potential of DeFi to democratize finance while emphasizing the need for robust risk mitigation strategies.

Stefan Scharnowski, Hossein Jahanshahloo

ABSTRACT This paper provides a first economic analysis of liquid staking tokens, which are derivatives representing a share of staked tokens in Proof‐of‐Stake blockchains. We document substantial time‐variation in the “liquid staking basis” as given by the price difference between a derivative staking token and its underlying cryptocurrency. We find evidence that staking rewards, concentration risks, limits to arbitrage, and behavioral factors influence this basis. The liquid staking basis is wider when the yields offered by the liquid staking protocol are low relative to the alternative of staking directly, when cryptocurrency returns are more volatile, and when secondary market liquidity is low. In contrast, it is smaller when investors pay more attention to liquid staking and when investor sentiment is positive. Furthermore, liquid staking tokens contribute a significant and overall growing amount to price discovery in the underlying cryptocurrencies.

Minh Hong Nguyen, Binh Nguyen Thanh, Huy Pham, Thi Thu Tra Pham

Decentralized lending in the DeFi ecosystem mirrors traditional financial intermediation but poses significant risks, particularly funding liquidity risk, due to the volatility and composbility of digital assets, high leverage, and the absence of regulatory protections. This study applies traditional financial intermediation theories to DeFi lending and empirically test which internal factors such as interest rates and user market power, as well as external factors like the USD Index, influence funding liquidity risk in DeFi lending. Analyzing high-frequency blockchain data using the ARDL model and a novel dynamic ARDL simulation from major pools such as Wrapped Bitcoin (WBTC) and Wrapped Ethereum (WETH), the research finds that current algorithmic interest rate models fail to function as effective self-stabilization mechanisms. Additionally, lower deposit concentration in these pools may exacerbate, rather than mitigate, funding liquidity risk.

Basile Maire, Marcus Wunsch

Automated Market Makers with concentrated liquidity have to date achieved market dominance among competing spot trading AMM models in Decentralized Finance. We shift the prevalent research focus on liquidity providers’ loss metrics, such as Impermanent Loss or Loss-Versus-Rebalancing, to a market neutral strategy. We derive a hedge portfolio which allows for concentrated liquidity provision while maintaining market neutrality. We present an example of the hedge portfolio and highlight the practical restrictions. The hedge portfolio consisting of options and futures requires a significant capital outlay compared to the amount of liquidity provided, but typically earns carry from futures contango.