Stefan Kitzler, Masarah Paquet-Clouston, Bernhard Haslhofer
The Decentralized Finance (DeFi) ecosystem has experienced over \$10 billion in direct losses due to crime events. Beyond these immediate losses, such events often trigger broader market reactions, including price declines, trading activity changes, and reductions in market capitalization. Decentralized Autonomous Organizations (DAOs) govern DeFi applications through tradable governance assets that function like corporate shares for voting and decision-making. Leveraging DeFi's granular trading data, we conduct an event study on 22 crime events between 2020 and 2022 to assess their economic impact on governance asset prices, trading volumes, and market capitalization. Using a dynamic difference-in-differences (DiD) framework with counterfactual governance assets, we aim for causal inference of intraday temporal effects. Our results show that 55% of crime events lead to significant negative price impacts, with an average decline of about 14%. Additionally, 68% of crime events lead to increased governance asset trading volume. Based on these impacts, we estimate indirect economic losses of over $1.3 billion in DAO market capitalization, far exceeding direct victim costs and accounting for 74% of total losses. Our study provides valuable insights into how crime events shape market dynamics and affect DAOs. Moreover, our methodological approach is reproducible and applicable beyond DAOs, offering a framework to assess the indirect economic impact on other cryptoassets.
Decentralization has an important geographic dimension that conventional metrics, such as stake distribution, often overlook. Where validators operate affects resilience to regional shocks (e.g., outages, natural disasters, or government intervention) as well as fairness in reward access. Yet major blockchain protocols do not encode geographical location in their rules; instead, validator locations emerge from a combination of economic incentives, regulatory constraints, infrastructure availability, and validator deployment choices. When certain locations offer systematic advantages, validators may strategically co-locate to maximize expected rewards, as observed in Ethereum, where validators cluster along the Atlantic corridor, which exhibits favorable latency. In this paper, we propose a formal model of validators' geographical positioning incentives under Ethereum's protocol design, capturing the interaction between its two block-building paradigms, local and external block building, and the geographical distribution of validators and information sources. We analytically characterize the model under a mean-field approximation and complement this analysis with an agent-based simulation calibrated with real-world latency data to quantify how these incentives translate into geographical concentration under heterogeneous geographic and infrastructural conditions. Our results show that Ethereum's block-building architecture is not geographically neutral. Both paradigms generate location-dependent payoffs and incentives to relocate closer to payoff-relevant parties in order to reduce propagation delays, although through different underlying mechanisms. Asymmetric access to information sources further amplifies geographical centralization. We also demonstrate that consensus parameters, such as attestation thresholds and slot times, modulate latency sensitivity and can amplify these effects, acting as protocol-level levers. Finally, we discuss the implications of our findings for protocol design and outline potential mitigation directions informed by our analysis.
Over the past decade alternatives to traditional insurance and banking have grown in popularity. The desire to encourage local participation has lead products such as peer-to-peer insurance, reciprocal contracts, and decentralized finance platforms to increasingly rely on network structures to redistribute risk among participants. In this paper, we develop a comprehensive framework for linear risk sharing (LRS), where random losses are reallocated through nonnegative linear operators which can accommodate a wide range of networks. Building on the theory of stochastic and doubly stochastic matrices, we establish conditions under which constraints such as budget balance, fairness, and diversification are guaranteed. The convex order framework allows us to compare different allocations rigorously, highlighting variance reduction and majorization as natural consequences of doubly stochastic mixing. We then extend the analysis to network-based sharing, showing how their topology shapes risk outcomes in complete, star, ring, random, and scale-free graphs. A second layer of randomness, where the sharing matrix itself is random, is introduced via Erdős--Rényi and preferential-attachment networks, connecting risk-sharing properties to degree distributions. Finally, we study convex combinations of identity and network-induced operators, capturing the trade-off between self-retention and diversification. Our results provide design principles for fair and efficient peer-to-peer insurance and network-based risk pooling, combining mathematical soundness with economic interpretability.
Decentralized exchanges (DEXs) form a cornerstone of the decentralized finance (DeFi) ecosystem, processing token trades worth billions of dollars daily. Yet, a significant fraction of these trades are suboptimal: alternative routing paths could yield more target tokens. Addressing this inefficiency is both practically urgent and theoretically compelling. Building on the linear line-graph-based routing method of Zhang et al. (2025), we propose three key extensions that better capture real-world trading complexity. First, we introduce a breadth-first search (BFS) link iteration rule that reduces computational cost and average execution time without sacrificing profitability. Second, we design a route-splitting strategy that divides large trades into smaller ones, alleviating price slippage and increasing average trader profits, albeit at the cost of higher computational overhead. Third, we generalize the method beyond a single DEX to a multi-DEX aggregator setting, reflecting actual trading environments. Using empirical data from Uniswap V2 and Sushiswap V2, we demonstrate that these extensions substantially improve both computational efficiency and profitability, establishing a foundation for future routing enhancements.
Marcin Wątorek, Marija Bezbradica, Martin Crane, Jarosław Kwapień · 5 authors
Based on the cryptocurrency market dynamics, this study presents a general methodology for analyzing evolving correlation structures in complex systems using the $q$-dependent detrended cross-correlation coefficient ρ(q,s). By extending traditional metrics, this approach captures correlations at varying fluctuation amplitudes and time scales. The method employs $q$-dependent minimum spanning trees ($q$MSTs) to visualize evolving network structures. Using minute-by-minute exchange rate data for 140 cryptocurrencies on Binance (Jan 2021-Oct 2024), a rolling window analysis reveals significant shifts in $q$MSTs, notably around April 2022 during the Terra/Luna crash. Initially centralized around Bitcoin (BTC), the network later decentralized, with Ethereum (ETH) and others gaining prominence. Spectral analysis confirms BTC's declining dominance and increased diversification among assets. A key finding is that medium-scale fluctuations exhibit stronger correlations than large-scale ones, with $q$MSTs based on the latter being more decentralized. Properly exploiting such facts may offer the possibility of a more flexible optimal portfolio construction. Distance metrics highlight that major disruptions amplify correlation differences, leading to fully decentralized structures during crashes. These results demonstrate $q$MSTs' effectiveness in uncovering fluctuation-dependent correlations, with potential applications beyond finance, including biology, social and other complex systems.
Recent advances in Large Language Models (LLMs) have shown remarkable capabilities in financial reasoning and market understanding. Multi-agent LLM frameworks such as TradingAgent and FINMEM augment these models to long-horizon investment tasks by leveraging fundamental and sentiment-based inputs for strategic decision-making. However, these approaches are ill-suited for the high-speed, precision-critical demands of High-Frequency Trading (HFT). HFT typically requires rapid, risk-aware decisions driven by structured, short-horizon signals, such as technical indicators, chart patterns, and trend features. These signals stand in sharp contrast to the long-horizon, text-driven reasoning that characterizes most existing LLM-based systems in finance. To bridge this gap, we introduce QuantHarness, the first multi-agent LLM framework explicitly designed for high-frequency algorithmic trading. The system decomposes trading into four specialized agents--Indicator, Pattern, Trend, and Risk--each equipped with domain-specific tools and structured reasoning capabilities to capture distinct aspects of market dynamics over short temporal windows. Extensive experiments across nine financial instruments, including Bitcoin and Nasdaq futures, demonstrate that QuantHarness consistently outperforms baseline methods, achieving higher predictive accuracy at both 1-hour and 4-hour trading intervals across multiple evaluation metrics. Our findings suggest that coupling structured trading signals with LLM-based reasoning provides a viable path for traceable, real-time decision systems in high-frequency financial markets.
Arash Peik, Mohammad Ali Zare Chahooki, Amin Milani Fard, Mehdi Agha Sarram
Precise short-term price prediction in the highly volatile cryptocurrency market is critical for informed trading strategies. Although Temporal Fusion Transformers (TFTs) have shown potential, their direct use often struggles in the face of the market's non-stationary nature and extreme volatility. This paper introduces an adaptive TFT modeling approach leveraging dynamic subseries lengths and pattern-based categorization to enhance short-term forecasting. We propose a novel segmentation method where subseries end at relative maxima, identified when the price increase from the preceding minimum surpasses a threshold, thus capturing significant upward movements, which act as key markers for the end of a growth phase, while potentially filtering the noise. Crucially, the fixed-length pattern ending each subseries determines the category assigned to the subsequent variable-length subseries, grouping typical market responses that follow similar preceding conditions. A distinct TFT model trained for each category is specialized in predicting the evolution of these subsequent subseries based on their initial steps after the preceding peak. Experimental results on ETH-USDT 10-minute data over a two-month test period demonstrate that our adaptive approach significantly outperforms baseline fixed-length TFT and LSTM models in prediction accuracy and simulated trading profitability. Our combination of adaptive segmentation and pattern-conditioned forecasting enables more robust and responsive cryptocurrency price prediction.
Cryptocurrency markets are highly volatile and influenced by both price trends and market sentiment, making effective portfolio management challenging. This paper proposes a dynamic cryptocurrency portfolio strategy that integrates technical indicators and sentiment analysis to enhance investment decision-making. Market momentum is captured using the 14-day Relative Strength Index (RSI) and Simple Moving Average (SMA), while sentiment signals are extracted from news articles with VADER and further validated using the Google Gemini large language model. These signals are incorporated into expected return estimates and used in a constrained mean-variance optimization framework. Backtesting across multiple cryptocurrencies shows that the integrated approach outperforms traditional benchmarks, including momentum strategy, Bitcoin Long-Short strategy, and an equal-weighted portfolio, achieving stronger risk-adjusted returns and more consistent cumulative growth. Furthermore, comparing the sentiment-only and technical-only strategies shows that incorporating sentiment information alongside technical indicators can lead to more consistent performance gains. However, the strategies exhibit substantial drawdowns that coincide with known periods of market stress, indicating that additional risk-management components are required to improve stability.
The global financial system stands at an inflection point. Stablecoins represent the most significant evolution in banking since the abandonment of the gold standard, positioned to enable "Banking 2.0" by seamlessly integrating cryptocurrency innovation with traditional finance infrastructure. This transformation rivals artificial intelligence as the next major disruptor in the financial sector. Modern fiat currencies derive value entirely from institutional trust rather than physical backing, creating vulnerabilities that stablecoins address through enhanced stability, reduced fraud risk, and unified global transactions that transcend national boundaries. Recent developments demonstrate accelerating institutional adoption: landmark U.S. legislation including the GENIUS Act of 2025, strategic industry pivots from major players like JPMorgan's crypto-backed loan initiatives, and PayPal's comprehensive "Pay with Crypto" service. Widespread stablecoin implementation addresses critical macroeconomic imbalances, particularly the inflation-productivity gap plaguing modern monetary systems, through more robust and diversified backing mechanisms. Furthermore, stablecoins facilitate deregulation and efficiency gains, paving the way for a more interconnected international financial system. This whitepaper comprehensively explores how stablecoins are poised to reshape banking, supported by real-world examples, current market data, and analysis of their transformative potential.
Mansi Sharma, Enrico Sartor, Marc Cavazza, Helmut Prendinger
Forecasting stock and cryptocurrency prices is challenging due to high volatility and non-stationarity, influenced by factors like economic changes and market sentiment. Previous research shows that Echo State Networks (ESNs) can effectively model short-term stock market movements, capturing nonlinear patterns in dynamic data. To the best of our knowledge, this work is among the first to explore ESNs for cryptocurrency forecasting, especially during extreme volatility. We also conduct chaos analysis through the Lyapunov exponent in chaotic periods and show that our approach outperforms existing machine learning methods by a significant margin. Our findings are consistent with the Lyapunov exponent analysis, showing that ESNs are robust during chaotic periods and excel under high chaos compared to Boosting and Naïve methods.
Hou-Wan Long, Yujun Pan, Xiongfei Zhao, Yain-Whar Si
As blockchain technology rapidly evolves, researchers face a significant challenge due to diverse and non-standardized simulation parameters, which hinder the replicability and comparability of research methodologies. This paper introduces a Generic Framework for Optimization in Blockchain Simulators (GFOBS), a comprehensive and adaptable solution designed to standardize and optimize blockchain simulations. GFOBS provides a flexible platform that supports various optimization algorithms, variables, and objectives, thereby catering to a wide range of blockchain research needs. The paper's key contributions are threefold: the development of GFOBS as a versatile tool for blockchain simulation optimization; the introduction of an innovative optimization method using warm starting technique; and the proposition of a novel concurrent multiprocessing technique for simultaneous simulation processes. These advancements collectively enhance the efficiency, replicability, and standardization of blockchain simulation experiments.
Generative modeling of high-frequency limit order book (LOB) dynamics is a critical yet unsolved challenge in quantitative finance, essential for robust market simulation and strategy backtesting. Existing approaches are often constrained by simplifying stochastic assumptions or, in the case of modern deep learning models like Transformers, rely on tokenization schemes that affect the high-precision, numerical nature of financial data through discretization and binning. To address these limitations, we introduce ByteGen, a novel generative model that operates directly on the raw byte streams of LOB events. Our approach treats the problem as an autoregressive next-byte prediction task, for which we design a compact and efficient 32-byte packed binary format to represent market messages without information loss. The core novelty of our work is the complete elimination of feature engineering and tokenization, enabling the model to learn market dynamics from its most fundamental representation. We achieve this by adapting the H-Net architecture, a hybrid Mamba-Transformer model that uses a dynamic chunking mechanism to discover the inherent structure of market messages without predefined rules. Our primary contributions are: 1) the first end-to-end, byte-level framework for LOB modeling; 2) an efficient packed data representation; and 3) a comprehensive evaluation on high-frequency data. Trained on over 34 million events from CME Bitcoin futures, ByteGen successfully reproduces key stylized facts of financial markets, generating realistic price distributions, heavy-tailed returns, and bursty event timing. Our findings demonstrate that learning directly from byte space is a promising and highly flexible paradigm for modeling complex financial systems, achieving competitive performance on standard market quality metrics without the biases of tokenization.
Stablecoins have become a foundational component of the digital asset ecosystem, with their market capitalization exceeding 230 billion USD as of May 2025. As fiat-referenced and programmable assets, stablecoins provide low-latency, globally interoperable infrastructure for payments, decentralized finance, DeFi, and tokenized commerce. Their accelerated adoption has prompted extensive regulatory engagement, exemplified by the European Union's Markets in Crypto-assets Regulation, MiCA, the US Guiding and Establishing National Innovation for US Stablecoins Act, GENIUS Act, and Hong Kong's Stablecoins Bill. Despite this momentum, academic research remains fragmented across economics, law, and computer science, lacking a unified framework for design, evaluation, and application. This study addresses that gap through a multi-method research design. First, it synthesizes cross-disciplinary literature to construct a taxonomy of stablecoin systems based on custodial structure, stabilization mechanism, and governance. Second, it develops a performance evaluation framework tailored to diverse stakeholder needs, supported by an open-source benchmarking pipeline to ensure transparency and reproducibility. Third, a case study on Real World Asset tokenization illustrates how stablecoins operate as programmable monetary infrastructure in cross-border digital systems. By integrating conceptual theory with empirical tools, the paper contributes: a unified taxonomy for stablecoin design; a stakeholder-oriented performance evaluation framework; an empirical case linking stablecoins to sectoral transformation; and reproducible methods and datasets to inform future research. These contributions support the development of trusted, inclusive, and transparent digital monetary infrastructure.
Synthetic time series are essential tools for data augmentation, stress testing, and algorithmic prototyping in quantitative finance. However, in cryptocurrency markets, characterized by 24/7 trading, extreme volatility, and rapid regime shifts, existing Time Series Generation (TSG) methods and benchmarks often fall short, jeopardizing practical utility. Most prior work (1) targets non-financial or traditional financial domains, (2) focuses narrowly on classification and forecasting while neglecting crypto-specific complexities, and (3) lacks critical financial evaluations, particularly for trading applications. To address these gaps, we introduce \textsf{CTBench}, the first comprehensive TSG benchmark tailored for the cryptocurrency domain. \textsf{CTBench} curates an open-source dataset from 452 tokens and evaluates TSG models across 13 metrics spanning 5 key dimensions: forecasting accuracy, rank fidelity, trading performance, risk assessment, and computational efficiency. A key innovation is a dual-task evaluation framework: (1) the \emph{Predictive Utility} task measures how well synthetic data preserves temporal and cross-sectional patterns for forecasting, while (2) the \emph{Statistical Arbitrage} task assesses whether reconstructed series support mean-reverting signals for trading. We benchmark eight representative models from five methodological families over four distinct market regimes, uncovering trade-offs between statistical fidelity and real-world profitability. Notably, \textsf{CTBench} offers model ranking analysis and actionable guidance for selecting and deploying TSG models in crypto analytics and strategy development.
Ethan Buchman, Paolo Dini, Shoaib Ahmed, Andrew Miller · 5 authors
For centuries, financial institutions have responded to liquidity challenges by forming closed, centralized clearing clubs with strict rules and membership that allow them to collaborate on using the least money to discharge the most debt. As closed clubs, much of the general public has been excluded from participation. But the vast majority of private sector actors consists of micro or small firms that are vulnerable to late payments and generally ineligible for bank loans. This low liquidity environment often results in gridlock and leads to insolvency, and it disproportionately impacts small enterprises and communities. On the other hand, blockchain communities have developed open, decentralized settlement systems, along with a proliferation of store of value assets and new lending protocols, allowing anyone to permissionlessly transact and access credit. However, these protocols remain used primarily for speculative purposes, and so far have fallen short of the large-scale positive impact on the real economy prophesied by their promoters. We address these challenges by introducing Cycles, an open, decentralized clearing, settlement, and issuance protocol. Cycles is designed to enable firms to overcome payment inefficiencies, to reduce their working capital costs, and to leverage diverse assets and liquidity sources, including cryptocurrencies, stablecoins, and lending protocols, in service of clearing more debt with less money. Cycles solves real world liquidity challenges through a privacy-preserving multilateral settlement platform based on a graph optimization algorithm. The design is based on a core insight: liquidity resides within cycles in the payment network's structure and can be accessed via settlement flows optimized to reduce debt.
Junliang Luo, Katrin Tinn, Şengül Duran, Di Wu · 5 authors
Tokenized U.S. Treasuries have emerged as a prominent subclass of real-world assets (RWAs), offering cryptographically secured, yield-bearing instruments issued across multi-chain Web3 infrastructures, with growing significance for transparency, accessibility, and financial inclusion. While the market has expanded rapidly, empirical analyses of transaction-level behaviours remain limited. This paper conducts a quantitative, function-level dissection of U.S. Treasury-backed RWA tokens, including BUIDL, BENJI, and USDY across multi-chain: mostly Ethereum and Layer-2s. Decoded contract calls expose core financial primitives such as issuance, redemption, transfer, and bridging, revealing patterns that distinguish institutional participants from smaller or retail users for the extent and limits of inclusivity in current RWA adoption. To infer address-level economic roles, we introduce a curvature-aware representation learning model. Our method outperforms baseline models in role inference on our collected U.S. Treasury transaction dataset and generalizes to address classification across broader public blockchain transaction datasets. The decoded transaction-level patterns in tokenized U.S. Treasuries across chains surface the degree of retail participation, and the role inference model enables the distinction between institutional treasuries, arbitrage bots, and retail traders based on behavioral patterns, facilitating future more transparent, inclusive, and accountable Web3 finance.
With the advancement of digital payment technologies, central banks worldwide have increasingly begun to explore the implementation of Central Bank Digital Currencies (CBDCs). This paper presents a comprehensive review of the latest developments in CBDC system design and implementation. By analyzing 135 research papers published between 2018 and 2025, the study provides an in-depth examination of CBDC design taxonomy and ecosystem frameworks. Grounded in the CBDC Design Pyramid, the paper refines and expands key architectural elements by thoroughly investigating innovations in ledger technologies, the selection of consensus mechanisms, and challenges associated with offline payments and digital wallet integration. Furthermore, it conceptualizes a CBDC ecosystem. A detailed comparative analysis of 26 existing CBDC systems is conducted across four dimensions: system architecture, ledger technology, access model, and application domain. The findings reveal that the most common configuration consists of a two-tier architecture, distributed ledger technology (DLT), and a token-based access model. However, no dominant trend has emerged regarding application domains. Notably, recent research shows a growing focus on leveraging CBDCs for cross-border payments to resolve inefficiencies and structural delays in current systems. Finally, the paper offers several forward-looking recommendations for future research.
Rugsafe introduces a comprehensive protocol aimed at mitigating the risks of rug pulls in the cryptocurrency ecosystem. By utilizing cryptographic security measures and economic incentives, the protocol provides a secure multichain system for recovering assets and transforming rugged tokens into opportunities and rewards. Foundational to Rugsafe are specialized vaults where rugged tokens can be securely deposited, and anticoin tokens are issued as receipts. These anticoins are designed to be inversely pegged to the price movement of the underlying rugged token. Users can utilize these anticoins within the ecosystem or choose to burn them, further securing the protocol and earning additional rewards. The supply of the native Rugsafe token is dynamically adjusted based on the volume, value, and activity of rugged tokens, ensuring stability and resilience. By depositing rugged tokens into a vault on several chains, and by burning anticoins, users receive incentives on the RugSafe chain. This protocol's vaults are designed to work in heterogenous blockchain ecosystems, offering a practical and effective solution to one of the most significant challenges in the cryptocurrency market.
This work presents a novel decentralized protocol for digital estate planning that integrates advances distributed computing, and cryptography. The original proof-of-concept was constructed using purely solidity contracts. Since then, we have enhanced the implementation into a layer-1 protocol that uses modern interchain communication to connect several heterogeneous chain types. A key contribution of this research is the implementation of several modern cryptographic primitives to support various forms of claims for information validation. These primitives introduce an unmatched level of privacy to the process of digital inheritance. We also demonstrate on a set of heterogeneous smart contracts, following the same spec, on each chain to serve as entry points, gateways, or bridge contracts that are invoked via a path from the will module on our protocol, to the contract. This ensures a fair and secure distribution of digital assets in accordance with the wishes of the decedent without the requirement of moving their funds. This research further extends its innovations with a user interaction model, featuring a check-in system and account abstraction process, which enhances flexibility and user-friendliness without compromising on security. By developing a dedicated permissionless blockchain that is secured by a network of validators, and interchain relayers, the proposed protocol signifies a transformation in the digital estate planning industry and illustrates the potential of blockchain technology in revolutionizing traditional legal and personal spheres. Implementing a cryptoeconomic network at the core of inheritance planning allows for unique incentive compatible economic mechanisms to be constructed.
This paper develops a formal game-theoretic model to examine how protocol mutability disrupts cooperative mining behaviour in blockchain systems. Using a repeated game framework with stochastic rule shocks, we show that even minor uncertainty in institutional rules increases time preference and induces strategic deviation. Fixed-rule environments support long-term investment and stable equilibrium strategies; in contrast, mutable protocols lead to short-termism, higher discounting, and collapse of coordinated engagement. Simulation results identify instability zones in the parameter space where rational mining gives way to extractive or arbitrage conduct. These findings support an Austrian economic interpretation: calculability requires rule stability. Institutional noise undermines the informational basis for productive action. We conclude that protocol design must be treated as a constitutional economic constraint, not a discretionary variable, if sustainable cooperation is to emerge in decentralised systems.
Ye Tian, Liangliang Song, Peng Qian, Yanbin Wang · 6 authors
The detection of malicious accounts on Ethereum - the preeminent DeFi platform - is critical for protecting digital assets and maintaining trust in decentralized finance. Recent advances highlight that temporal transaction evolution reveals more attack signatures than static graphs. However, current methods either fail to model continuous transaction dynamics or incur high computational costs that limit scalability to large-scale transaction networks. Furthermore, current methods fail to consider two higher-order behavioral fingerprints: (1) direction in temporal transaction flows, which encodes money movement trajectories, and (2) account clustering, which reveals coordinated behavior of organized malicious collectives. To address these challenges, we propose DiT-SGCR, an unsupervised graph encoder for malicious account detection. Specifically, DiT-SGCR employs directional temporal aggregation to capture dynamic account interactions, then coupled with differentiable clustering and graph Laplacian regularization to generate high-quality, low-dimensional embeddings. Our approach simultaneously encodes directional temporal dynamics, global topology, and cluster-specific behavioral patterns, thereby enhancing the discriminability and robustness of account representations. Furthermore, DiT-SGCR bypasses conventional graph propagation mechanisms, yielding significant scalability advantages. Extensive experiments on three datasets demonstrate that DiT-SGCR consistently outperforms state-of-the-art methods across all benchmarks, achieving F1-score improvements ranging from 3.62% to 10.83%.
The decentralized finance (DeFi) community has grown rapidly in recent years, pushed forward by cryptocurrency enthusiasts interested in the vast untapped potential of new markets. The surge in popularity of cryptocurrency has ushered in a new era of financial crime. Unfortunately, the novelty of the technology makes the task of catching and prosecuting offenders particularly challenging. Thus, it is necessary to implement automated detection tools related to policies to address the growing criminality in the cryptocurrency realm.
The present dissertation addresses the problem of fairly distributing shared resources in non-commercial blockchain networks. Blockchains are distributed systems that order and timestamp records of a given network of users, in a public, cryptographically secure, and consensual way. The records, which may in kind be events, transaction orders, sets of rules for structured transactions etc. are placed within well-defined datastructures called blocks, and they are linked to each other by the virtue of cryptographic pointers, in a total ordering which represents their temporal relations of succession. The ability to operate on the blockchain, and/or to contribute a record to the content of a block are shared resources of the blockchain systems. In commercial networks, these resources are exchanged in return for fiat money, and consequently, fairness is not a relevant problem in terms of computer engineering. In non-commercial networks, however, monetary solutions are not available, by definition. The present non-commercial blockchain networks employ trivial distribution mechanisms called faucets, which offer fixed amounts of free tokens (called cryptocurrencies) specific to the given network. This mechanism, although simple and efficient, is prone to denial of service (DoS) attacks and cannot address the fairness problem. In the present dissertation, the faucet mechanism is adapted for fair distribution, in line with Max-min Fairness scheme. In total, we contributed 6 distinct Max-min Fair algorithms as efficient blockchain faucets. The algorithms we contribute are resistant to DoS attacks, low-cost in terms of blockchain computation economics, and they also allow for different user weighting policies.
web3 wallets are key to managing user identity on blockchain. The main purpose of a web3 wallet application is to manage the private key for the user and provide an interface to interact with the blockchain. The key management scheme ( KMS ) used by the wallet to store and recover the private key can be either custodial, where the keys are permissioned and in custody of the wallet provider or noncustodial where the keys are in custody of the user. The existing non-custodial key management schemes tend to offset the burden of storing and recovering the key entirely on the user by asking them to remember seed-phrases. This creates onboarding hassles for the user and introduces the risk that the user may lose their assets if they forget or lose their seedphrase/private key. In this paper, we propose a novel method of backing up user keys using a non-custodial key management technique that allows users to save and recover a backup of their private key using any independent sign-in method such as google-oAuth or other 3P oAuth.