Blockchain Papers

Espen Bjellerås

No abstract is available for this record.

Xihan Xiong, Zhipeng Wang, Xi Chen, William J. Knottenbelt · 5 authors

In the Proof of Stake (PoS) Ethereum ecosystem, users can stake ETH on Lido to receive stETH, a Liquid Staking Derivative (LSD) that represents staked ETH and accrues staking rewards. LSDs improve the liquidity of staked assets by facilitating their use in secondary markets, such as for collateralized borrowing on Aave or asset exchanges on Curve. The composability of Lido, Aave, and Curve enables an emerging strategy known as leverage staking, an iterative process that enhances financial returns while introducing potential risks. This paper establishes a formal framework for leverage staking with stETH and identifies 442 such positions on Ethereum over 963 days. These positions represent a total volume of 537,123 ETH (877m USD). Our data reveal that 81.7% of leverage staking positions achieved an Annual Percentage Rate (APR) higher than conventional staking on Lido. Despite the high returns, we also recognize the potential risks. For example, the Terra crash incident demonstrated that token devaluation can impact the market. Therefore, we conduct stress tests under extreme conditions of significant stETH devaluation to evaluate the associated risks. Our simulations reveal that leverage staking amplifies the risk of cascading liquidations by triggering intensified selling pressure through liquidation and deleveraging processes. Furthermore, this dynamic not only accelerates the decline of stETH prices but also propagates a contagion effect, endangering the stability of both leveraged and ordinary positions.

Serhan Kotiloglu, Maria Paola Ometto

Initial coin offering (ICO) is a Web-3 based financing method for ventures, which allows them to use digital assets (e.g., tokens) to raise capital. During an ICO, the entrepreneur has control on ownership; they can choose to issue a very small number of tokens which would allow them to keep “their skin in the game” and retain ownership, or issue all the tokens they hold, which would distribute ownership to investors and have a community-decentralized orientation. While previous literature has identified several factors of ICO success, they have not delved into the role of ownership in ICO success. In this study, we explore whether retaining or distributing ownership during an ICO is more beneficial for raising capital. We find a two-pronged explanation. When looking at ICOs maintaining a higher level of ownership, entrepreneurs are catering to corporate-market logic investors, and we see a U relationship where the optimal percentage in which the entrepreneurs show they have skin in the game at the same time as giving enough to investors. But then, there are ICOs distributing most of its ownership in which entrepreneurs are attracting community-oriented investors, and as such, the higher the distribution the higher the investment. We propose that this is related to how there are different investors audiences’ that will value different practices and ideals and choose differently on what types of projects to invest in. Our research elucidates this new funding source. Nonetheless, future research should investigate these exploratory findings.

Ahmad A. Rabaa’i, Shereef Abu Al Maati, Nooh Bany Muhammad, Enas M. Eljamal

Investment in non-fungible tokens (NFTs) has decreased dramatically over the past two years, despite the financial value and potential importance of NFTs for the future of the economy and the current decentralized marketplaces. This study investigated the barriers influencing customers' resistance to investing in NFTs using the innovation resistance theory (IRT) components such as usage barriers, value barriers, risk barriers, tradition barriers, and image barriers. The data was gathered from 375 investors via an online questionnaire. To assess and evaluate the suggested model and its hypotheses, responses were investigated using a partial least square structural equation modeling approach (PLS-SEM). The findings indicate that the five resistance-related barriers are all substantial deterrents to investing in NFTs. The usage barrier was the most significant barrier, whereas the value barrier was the least significant. The study's findings have far-reaching implications for academics, NFTs’ marketplaces, policymakers, and investors.

Viktor Ström, Nima Sanandaji, Saeid Esmaeilzadeh, M Esmaeilzadeh

Purpose The purpose of this paper is to investigate the potential link between Sweden’s high reliance on equity capital financing among small and medium-sized enterprises (SMEs) and its recognition as the most innovative economy in Europe according to the European Innovation Scoreboard (EIS). This paper examines the idea that the high levels of trust within Swedish society can explain why private equity financing is more prevalent among Swedish SMEs. Design/methodology/approach To test these ideas, the authors use data from the Survey on Access to Finance for Enterprises to measure the private equity reliance of firms. The authors also use the EIS to measure the innovation capacity of nations and various aspects of SMEs’ innovation activities. Finally, societal levels of trust are measured through the World Value Survey. Findings First, the authors find that European countries with a higher proportion of SMEs relying on equity financing tend to be ranked as more innovative by the EIS. Second, the authors find that the correlation between a nation’s share of SMEs relying on equity financing and their level of innovation activities is marginally stronger for product innovations than for business process innovations. Third, the authors find that countries with higher levels of trust tend to have higher equity capital reliance among SMEs. Originality/value This study builds upon previous research on equity capital and SMEs’ innovation activity while introducing new insights into the relationship between societal trust and equity financing.

Authors unavailable

Raising capital for a project from a crowd of retail investors has become established as a practice in the last decade. A practice mainly driven by the lack of alternatives for startup entrepreneurs, and the various positive features and functionalities of these models, allowing for more audience engagement, proof of concept, marketing, etc. With the proliferation of blockchain technologies (also known as distributed ledger technologies), there is a technical opportunity for these processes to be refined and for equity crowdfunding to enter a new stage of development. This study proposes a model for the application of blockchain aimed in this direction – addressing the problems and deficits of current models by implementing technological solutions based on distributed ledger technologies.

Tunahan TİMUÇİN, Serdar Biroğul

Blockchain-based smart contracts are self-running computer programs that can automate a variety of commercial activities. Currently, the majority of these decentralized applications are developed using smart contract platforms like Polkadot, Cardano, and Ethereum. In addition to analyzing current technology developments and prospective future applications, this article provides a historical review of smart contract platforms. The study emphasizes the significance of smart contract platforms for supporting blockchain-based applications and enabling decentralized finance (DeFi). It also looks at the emergence of layer-2 scaling solutions, the introduction of non-fungible tokens (NFTs), and the growing need of interoperability among different smart contract platforms. The article also looks at the potential for multi-chain smart contracts, the effects of quantum computing, the integration of AI and ML technologies with smart contract platforms, and the potential for smart contract platforms to support decentralized autonomous organizations (DAOs). The difficulties of expanding smart contract platforms, the requirement for uniformity in the creation of smart contracts, and the potential for smart contract platforms to revolutionize sectors like healthcare, real estate, and supply chain management are also covered. The paper emphasizes the significance of ongoing innovation and development in smart contract platforms for the expansion of the blockchain ecosystem as it draws to a close.

Rodrigo de Carvalho Kencis

This dissertation discusses investment structures in startups operating in the decentralized finance sector. Currently holding second place in the decentralized finance market, Brazil has been standing out for the projects being developed on its territory and for the volume of investments received by startups operating in the DeFi market. Throughout this work, we sought to demonstrate the evolutionary process of startups, from the idea's conception to its implementation, and to present the path taken by founders and investors, culminating in the celebration of an investment instrument. In addition to the theoretical exposition, this dissertation aimed to bring the investment process into practical conception by exposing contractual clauses commonly used in instruments signed for this purpose. This work expects to stimulate the deepening of the study of the decentralized finance market, which is currently under legal and regulatory scrutiny from the Brazilian Central Bank and the Brazilian Securities and Exchange Commission

Jan Schwiderowski, Asger Balle Pedersen, Jonas Kasper Jensen, Roman Beck

Abstract Information technology (IT) has radically changed the financial services industry, with the most recent transformation toward Fintech and decentralized finance (DeFi), driven by blockchain. Especially, non-fungible token (NFT) assets within DeFi are redefining how value is created and disseminated, for instance, in the art industry. However, DeFi and NFT market dynamics are not yet well understood. Using a thematic analysis based on 14 interviews with major NFT stakeholders (i.e., marketplace providers, artists, and investing collectors), we identify these NFT stakeholders’ different motivations and strategic options and explain the value creation and capture dynamics in the NFT art market resulting from their interactions. We argue for decomposing an NFT’s value into an NFT-intrinsic and an NFT-extrinsic part. Finally, we elaborate that art NFTs are not a new class of assets because many of their properties are similar to related assets such as physical art and cryptocurrencies.

Klaus Ulrich, José Manuel Guaita Martínez, Patricia Carracedo, Domingo Ribeiro Soriano

Purpose The study aims to shed light on the concepts most addressed in scientific research, which blockchain topics are of most interest, how relevant are these tools for academia, and how relevant are they? Design/methodology/approach The authors have developed a bibliometric study of scientific publications on blockchain made since 2016. For the analysis, the VOSViewer software version 1.6.19 has been used, which allows a statistical analysis of scientific publications on the subject. Findings The study manifest the relevance of Initial Coin Offering, growth of research interest in this field and the relevance of blockchain technology in the development of entrepreneurial projects. Originality/value This study provides a complete and updated picture of the scientific research on blockchain for the subsequent transfer of knowledge to the business world.

Amy Winecoff, Johannes Lenhard

Proponents and developers of Web3 and blockchain argue that these technologies can revolutionize how people live and work by empowering individuals and distributing decision-making power. While technologists often have expansive hopes for what their technologies will accomplish over the long term, the practical challenges of developing, scaling, and maintaining systems amidst present-day constraints can compromise progress toward this vision. How technologists think about the technological future they hope to enable and how they navigate day-to-day issues impacts the form technologies take, their potential benefits, and their potential harms. In our current work, we aimed to explore the visions of Web3 and blockchain technologists and identify the immediate challenges that could threaten their visions. We conducted semi-structured interviews with 29 operators and professional investors in the Web3 and blockchain field. Our findings revealed that participants supported several ideological goals for their projects, with decentralization being a pivotal mechanism to enable user autonomy, distribute governance power, and promote financial inclusion. However, participants acknowledged the practical difficulties in fulfilling these promises, including the need for rapid technology development, conflicts of interest among stakeholders due to platform financing dynamics, and the challenge of expanding to mainstream users who may not share the "Web3 ethos." If negotiated ineffectively, these challenges could lead to negative outcomes, such as corrupt governance, increased inequality, and increased prevalence of scams and dubious investment schemes. While participants thought education, regulation, and a renewed commitment to the original blockchain ideals could alleviate some problems, they expressed skepticism about the potential of these solutions.

Ninne Zahara Silviani, Seela Anwar Sya'adah

In the last two decades, art and technology are increasingly inseparable. Existing technology has developed rapidly, in this case the internet which has given birth to a new era known as the digital era which was followed by the emergence of many legal problems, one of which was copyright infringement. The emergence of Non-Fungible Tokens (NFTs) is said to be able to democratize the arts industry and Indonesia digital economy decentralized. Indonesia has a regulation named the Law of the Republic of Indonesia Number 28 of 2014 which regulates the exclusive rights of creators from the industrial sector to works of art. With the existence of These Non-Fungible Tokens (NFTs) the copyright of a digital artwork is questionable. The unique thing with the existence of this Non-Fungible Tokens (NFTs) is that Non-Fungible Tokens (NFTs) does not have the same values, each unique asset cannot be exchanged, so the artists use Non-Fungible Tokens (NFTs) as a certificate of ownership of a rare digital asset. However, because there is no specific regulation regarding Non-Fungible Tokens (NFTs) either in copyright regulations or its protection by the government, there have been cases of copyright infringement intentionally or unintentionally. This research aims to analyze how Indonesian government set the pace to protect copyrights of digital artworks as a preparation for the Indonesia 2030 Digital Economy Development.

Costantine Paschal Kulwa

Blockchain smart contracts show the next stage in the development of protocols that support the interaction of independent nodes without the presence of a governing authority. Blockchain smart contracts are believed to be a potentially enabling technology for a wealth of future applications. But turns out, like every other maturing technology, blockchain smart Contract also has it challenges and limitations. Understanding these challenges and limitation can help business making decision before they put their efforts in blockchain application development. In this paper game theory is combined to look into what Smart Contracts are and what they are assumed to be. The aim is to give businesses a clear idea about smart contracts and help them to decide if the contracts are viable for large scale application.

Yang Yu

Digital finance development has an important role in promoting economic transformation and has become a new engine leading the development of the real economy, while green innovation is an important goal of the current economic transformation to a green and sustainable one. Based on the panel data of Shanghai and Shenzhen A-share listed companies from 2008 to 2018, this paper finds that digital finance has a significant promoting effect on the green innovation of new energy enterprises through panel data fixed effects regression model. Furthermore, through sub-sample regression, it is found that the promotion effect of digital finance on new energy enterprises is heterogeneous, and the promotion effect is more significant for state-owned enterprises and enterprises with more decentralized power. The above findings of this paper have important implications for the current economic transformation in China.

Marcus O’Dair

Following the emergence of file-sharing networks such as Napster and BitTorrent, the record industry has tended to regard peer-to-peer networks in a negative light. This is hardly surprising: in the terms of Yochai Benkler, such networks provided ‘technological shock’ but not ‘economic sustainability’, at least form an industry perspective. Some have seen recent technological developments as revolutionary, but it is a revolution only in potential: though music can be recorded and distributed more easily than ever, there remains a crisis in terms of attribution and monetisation that the Sisyphean ‘war on copyright’ seems unlikely to solve. Royalty payments in the streaming era, meanwhile, are slow, inefficient and enormously complex. A twentieth century, industrial information model, then, remains dominant, although the apparently inexorable overall decline in income from recorded music is gradually reducing it to a mere husk. This paper suggests that blockchain technology, which, like Napster and BitTorrent, harnesses the power of peer-to-peer networks, could represent a more sustainable model, realising the revolutionary potential of disintermediation and direct-to-fan models to facilitate a shift to what, with a nod to Benkler’s ‘networked information economy’, might be called the networked record industry. As well as exploring the workings of distributed ledger technology, this article outlines the transformation it could bring about in determining the authorship and attribution of recorded music; enabling asset transfers and the tracking of provenance; allowing artists to determine their own pricing and terms of use for their music; facilitating licensing through metadata; introducing frictionless, near-instant micropayments for streaming and downloads. The broader themes of the networked record industry – disintermediation, transparency and the nexus of control – are also explored, as well as barriers to adoption.

Saniya Chadda, Hsi-Yu Chen, Radhika Mahadevia, Tony Zhang

No abstract is available for this record.

Xing Bao, Prakash Mirchandani, Jennifer Shang

No abstract is available for this record.

Md Romel Sharif

In the evolving landscape of international trade, this comprehensive exploration delves into the paradigm shift enabled by smart contracts, challenging the traditional role of Documentary Credits (LCs). By prioritizing transparency, the article showcases how the integration of smart contracts revolutionizes proforma invoicing submission and offers a robust mechanism for scrutinizing over and under-invoicing—an entrenched tactic in Trade-Based Money Laundering (TBML). The innovative concept of introducing a bidding process within smart contracts opens doors for global participation, reducing entry barriers for startups and entrepreneurs, thereby transforming poverty into prosperity. These transformative mechanisms, rooted in blockchain technology, mark a compelling shift towards combatting TBML and fostering a more inclusive and dynamic global economy.

Aryan Rastogi, Amogh Dixit, Hirsh Pithadia, Philip Treleaven

No abstract is available for this record.

Ezinne C Chukwuma-Eke, Verlinda Attipoe, Comfort Iyabode Lawal, Solomon Christopher Friday · 6 authors

This paper examines innovative financial instruments essential for scaling renewable energy projects, with a focus on the role of impact investments for small and medium-sized enterprises (SMEs) in the energy sector. The increasing demand for clean energy solutions has created a need for sustainable financing options tailored to SMEs, who often face significant barriers in accessing traditional forms of capital. This research highlights the potential of innovative financial instruments, including green bonds, sustainability-linked loans, decentralized finance (DeFi), and crowdfunding, to overcome these challenges. The paper also explores the role of venture capital, private equity, and institutional investors in providing much-needed capital for renewable energy projects. Key challenges identified include regulatory inconsistencies, market liquidity issues, and technological limitations, which hinder the growth of renewable energy investments in the SME sector. To address these challenges, the paper presents several strategic solutions, such as risk mitigation strategies, blended finance models, and policy recommendations that can foster a more conducive environment for renewable energy financing. International cooperation and multilateral institutions are also highlighted as crucial to supporting SMEs in accessing funding for clean energy projects. This paper concludes by providing practical implications for SMEs, investors, and policymakers and outlines future research directions to enhance further the effectiveness of innovative financing models in promoting sustainable energy development.

Amanda K. Sharp

No abstract is available for this record.

Julia Sinnig, Dirk Andreas Zetzsche

Abstract 157 This article discusses the regulatory definition of collective investment undertakings (CIUs) as provided for by Article 4 (1) (a) AIFMD and Article 1 (1) UCITSD in the context of traditional family offices, holding companies, and joint ventures, and distinguishes them from more recently observed digital asset pools such as digitally managed accounts, crypto lending, crypto staking, and decentralized autonomous organizations.Testing the legal definition of CIUs in the context of traditional and digital pooled investments allows not only for the delineation of the scope of AIFMD (and to a lesser extent, UCITSD), but also provides insights on the desirable content of Level 2 regulation under MiCA. While ESMA guidance based on many years of supervisory experience sets the limits on traditional use cases, the digital boundaries of collective investment schemes are largely untested and to some extent uncertain, resulting in high costs for legal advice, as demonstrated by our brief look into MiCA set out in this article. To address these matters, we argue in favor of broad default rules on pooled finance, paired with exemptive powers from individual or all rules where a disparity exists between the purpose of regulation and the regulated activities. If paired with carve-outs for applications below EUR 5 million (where retail investors are present) and EUR 100 million (sophisticated clients only), these default rules would assist supervisory authorities in setting adequate boundaries for investment fund regulation of innovative financial products. After the introduction (Pt. I), Pt. II outlines the legal definition(s) of CIUs; Pt. III discusses the regulatory limits in the context of traditional use cases; Pt. IV analyzes the limits for digitally managed accounts, decentralized autonomous organizations (DAOs), and decentralized finance as a whole (referred to collectively as “digital limits”); Pt. V presents our policy considerations; and Pt. VI concludes.

Christopher K. Odinet, Andrea Tosato

No abstract is available for this record.

Yuliya Guseva

Non-fungible tokens (NFTs) are used in numerous markets for collectibles, art, securities, and commodities. These are different markets, and there is no regulatory framework for all NFTs. To determine a proper legal regime, it is essential to locate the market to which an NFT belongs. This task requires a deep understanding of the economic realities of the associated rights, assets, and transactions. Economic-reality-based interpretations should provide a solid footing for better regulation of NFTs in the US and other jurisdictions grappling with NFT regulation. The new cryptoasset regime in the EU already incorporates a “substance over form” approach. In the US, courts have been successfully applying the Howey test to examine transactions and schemes and establish whether securities law should apply to cryptoassets. In 2023, the SEC and a US federal district court applied the Howey test to demonstrate why and how securities law built for legacy markets where mainstream assets are fungible could apply to transactions in non-fungible assets. The decisions are an example of establishing economic realities of transactions with novel assets regardless of the underlying technologies on which the assets are built. An economic reality approach should help courts and other policy-makers ascertain to which market an NFT belongs and which corresponding legal regime should govern.