In order for tokenized asset networks to be accountable as Web3 marketplaces for token-related transactions, identity verification must be conducted by gateways into those token networks. This includes the identity validation and legal status verification of the originators and beneficiaries, the gateway owners/operators, and other relevant service providers. The classic identity provider model could be enhanced to support anti-money laundering regulations, notably the Travel Rule. A privacy-preserving IdP model in combination with a legal service provider is explored where the IdP becomes the issuer of a blinded attestation regarding the user attribute, and where the legal representative with attorney-client privilege becomes the first point of contact for requests for the disclosure of the blinded attestations.
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.
Blockchain and tokens are relatively new research areas insufficiently explored from both technical and economic perspectives. Even though tokens provide benefits such as easier market access, increased liquidity, lower transaction costs, and automated transactional process, their valuation and price determination are still challenging due to factors such as a lack of intrinsic value, volatility, and regulation making trading risky. In this paper, we address this knowledge gap by reviewing the existing literature on token creation and valuation to identify and document the factors affecting their valuation, investment, and founding, as well as the most promising domains of applicability. The study follows the PRISMA methodology and uses the Web of Science database, defining clear research questions and objective inclusion criteria for the articles. We discuss token technical development, including creating, issuing, and managing tokens on an Ethereum blockchain using smart contracts. The study revealed several key factors that significantly impact the field of tokenomics: demand and supply, social incentives, market conditions, macroeconomics, collective behavior, speculation, and inclusion in index funds. The most relevant use cases of blockchain and tokens are related to the digitization of virtual and physical assets, accountability, and traceability usual in smart grids or supply chains management, social governance, and art and gamification including metaverse.
Natkamon Tovanich, Myriam Kassoul, Simon Weidenholzer, Julien Prat
We study financial contagion in Compound V2, a decentralized lending protocol deployed on the Ethereum blockchain. We explain how to construct the balance sheets of Compound's liquidity pools and use our methodology to characterize the financial network. Our analysis reveals that most users either borrow stablecoins or engage in liquidity mining. We then study the robustness of Compound through a series of stress tests, identifying the pools that are most likely to set off a cascade of defaults.
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.
This research examines the polycentric governance of digital assets in blockchain-based Decentralized Autonomous Organizations (DAOs). It offers a theoretical framework and addresses a critical challenge facing decentralized governance by developing a method to identify Sybils, or spurious identities. Sybils pose significant organizational sustainability threats to DAOs and other, commons-based online communities, and threat models are identified. The experimental method uses an autoencoder architecture and graph deep learning techniques to identify Sybil activity in a DAO governance dataset (snapshot.org). Specifically, a Graph Convolutional Neural Network (GCNN) learned voting behaviours and a fast vector clustering algorithm used high-dimensional embeddings to identify similar nodes in a graph. The results reveal that deep learning can effectively identify Sybils, reducing the voting graph by 2-5%. This research underscores the importance of Sybil resistance in DAOs, identifies challenges and opportunities for forensics and analysis of anonymous networks, and offers a novel perspective on decentralized governance, informing future policy, regulation, and governance practices.
The functioning of the present-day financial system relies on the movement of funds and information. DeFi (Decentralized Finance), utilising blockchain technology, possesses the capability to establish autonomous and trustworthy smart contracts that do not require the involvement of intermediaries for escrow and auditing purposes. This results in the creation of a financial system that is characterised by its openness and transparency, devoid of any form of identity-based discrimination, and accessible to all individuals. The utilisation of a private blockchain system facilitates enhanced efficiency, while concurrently ensuring the attainment of privacy and security objectives. Moreover, such a system aligns more closely with prevailing regulatory standards. The Coalition Chain has the characteristic of a scale-free network, with its nodes following a power law distribution. This work aims to investigate credit governance from the standpoint of group behaviour and provide optimisation solutions accordingly.
Purpose: This analysis examines the trend of using non-fungible tokens (NFTs) to represent digital collectibles, specifically in the context of the sports industry. The use of NFTs, or NFT-FAN tokens, allows for the creation of unique and verifiable digital collectibles that can be bought, sold, and traded on Blockchain marketplaces. This trend has the potential to reshape the sports industry by providing new revenue streams for teams and players, as well as giving fans a new way to engage with and show support for their favourite teams and players. The analysis will explore the current state of the NFT-FAN token market, its potential impact on the sports industry, and the challenges and opportunities it presents. Design/Methodology/Approach: This research attempts to identify the market cap for NFT Tokens with UFA Champions Football League case study analysis in three stages. The first stage is Data preprocessing, followed by market analysis and finally observed market cap ups and downs along with types of NFT Tokens. Findings: The finding shows 1) Most and Least Traded Token in Last 24 Hours 2) Lowest and Maximum priced FAN Token Originality//Value: This research brings the importance of FAN Token in the field of sports industry and trend for NFTs Token Market Cap in sports industry.
The ROSA Journal focuses on three primary areas: (1) the examination of blockchain and Web3 research within societal contexts; (2) the application of quantitative methodologies in the fields of the humanities and social sciences; and (3) the provision of research-driven reviews of current social, political, and economic issues. We support the promotion of interdisciplinary collaboration between individuals from the natural sciences and the social sciences in order to produce a body of scientific knowledge that exceeds the capacity of a conventional academic journal.
This study explores the relationship between a company’s cryptocurrency holdings and its sustainable performance. The study also looks into how factors such as external financial crises, internal financial conditions, and cash shortages affect the link between possession of cryptocurrencies and company sustainable performance. The empirical findings showed that while holdings of cryptocurrencies may generally have a negative impact on a company’s performance, cryptocurrency holdings by businesses during an external financial crisis such as COVID-19 may have a positive relationship with the sustainable performance of the business. The findings support earlier research that suggested cryptocurrency ownership can have both positive and negative effects on a company, but that it can also boost firm performance in times of external financial hardship. By demonstrating a higher favorable connection for larger amounts of cryptocurrency holdings, these results can be further supported. The implications of holding cryptocurrencies on internal and external financial strain vary. Regarding internal financial issues, it was discovered that keeping cryptocurrencies had a favorable impact on sustainable performance for financially healthy businesses. It was also demonstrated that the company’s cryptocurrency holdings, which it keeps despite its cash shortage, had a detrimental impact on performance. Even in such a case, it was confirmed that holding cryptocurrencies has a favorable impact on a company’s sustainable performance when it is in good financial standing. The findings imply that, despite the unavoidable external financial challenges, the internal financial condition must be healthily maintained if a business engages in cryptocurrency.
Blockchain technology contributes to achieving the Sustainable Development Goals. Education for sustainable development (ESD) is UNESCO’s education sector response to the urgent and dramatic challenges the planet faces. The traditional way of donating money to charitable causes, such as education, has been through centralized methods and organizations that lack transparency, and donors often do not have a clear understanding of how their contributions are being utilized. Blockchain technology, particularly, platforms like Ethereum and Polygon, has the potential to address the issues associated with traditional donation systems. This paper proposes a decentralized web3 application that utilizes blockchain technology to enhance transparency and efficiency in educational donations in the context of sustainable development. The platform leverages decentralized protocols and smart contracts to ensure secure and transparent transactions, enabling donors to track the utilization of their contributions and ensuring their funds reach their intended beneficiaries. This paper discusses the design and implementation of the platform, highlighting its features and potential for transforming the landscape of charitable donations. This software application can be used in education, and a demo plus some scenarios/work cases are presented/analyzed. The main results and contributions open other future research directions for not only authors.
Alex Berke, Tobin South, Robert Mahari, Kent Larson · 5 authors
Tax returns contain key financial information of interest to third parties: public officials are asked to share financial data for transparency, companies seek to assess the financial status of business partners, and individuals need to prove their income to landlords or to receive benefits. Tax returns also contain sensitive data such that sharing them in their entirety undermines privacy. We introduce a zero-knowledge tax disclosure system (zkTax) that allows individuals and organizations to make provable claims about select information in their tax returns without revealing additional information, which can be independently verified by third parties. The system consists of three distinct services that can be distributed: a tax authority provides tax documents signed with a public key; a Redact & Prove Service enables users to produce a redacted version of the tax documents with a zero-knowledge proof attesting the provenance of the redacted data; a Verify Service enables anyone to verify the proof. We implement a prototype with a user interface, compatible with U.S. tax forms, and demonstrate how this design could be implemented with minimal changes to existing tax infrastructure. Our system is designed to be extensible to other contexts and jurisdictions. This work provides a practical example of how distributed tools leveraging cryptography can enhance existing government or financial infrastructures, providing immediate transparency alongside privacy without system overhauls.
Abstract: An millions of students Graduates per year. A student generates lots of certificates during their education. For further studies or Apply for job at any company requires these certificates. So sometimes student need these certificate on urgent basis. But according to university guidelines generating certificate process takes time. This problem is solved by Digital Certificate System. While recruiting employees in company, company needs to verify their certificate because issue of fake certificate is very common in India. Anyone can get fake certificate very easily. Many companies spend large amount of money on verifying this certificate. To overcome these problem Blockchain technology is used. Blockchain is decentralized distributed ledger. Blockchain is immutable in which no one can easily modify the data.
The rise of illegal activities involving blockchain digital currencies is a growing concern. Criminals exploit the anonymity and decentralization of blockchain to increase the accessibility of money laundering, fraud, and illegal fund flows. This challenges the traditional regulatory methods and existing level of security. In this study, financial risk control is combined with machine learning to identify and predict user default risks for preventing illicit activities by users with poor credit. We build a fusion model using LightGBM and XGBoost to analyze 18-month user borrowing, payment, and repayment data for predicting credit default probabilities. The experimental results demonstrate that our approach exhibits high performance in user financial credit analysis, with an AUC, F1-score, and an overall score of 96.8%, 94.7%, and 79.9%, respectively. The identification of low-credit users provides crucial insights for blockchain regulators, thus aiding in the early intervention and prevention of the misuse of digital currencies and ensuring financial security in the blockchain system.
The paper introduces an advanced Decentralized Energy Marketplace (DEM) integrating blockchain technology and artificial intelligence to manage energy exchanges among smart homes with energy storage systems. The proposed framework uses Non-Fungible Tokens (NFTs) to represent unique energy profiles in a transparent and secure trading environment. Leveraging Federated Deep Reinforcement Learning (FDRL), the system promotes collaborative and adaptive energy management strategies, maintaining user privacy. A notable innovation is the use of smart contracts, ensuring high efficiency and integrity in energy transactions. Extensive evaluations demonstrate the system's scalability and the effectiveness of the FDRL method in optimizing energy distribution. This research significantly contributes to developing sophisticated decentralized smart grid infrastructures. Our approach broadens potential blockchain and AI applications in sustainable energy systems and addresses incentive alignment and transparency challenges in traditional energy trading mechanisms. The implementation of this paper is publicly accessible at \url{https://github.com/RasoulNik/DEM}.
Non-Fungible Token (NFT) is a carrier of unique identity as a virtual currency. Its indivisible, unique, and verifiable characteristics can truly reflect personal assets and virtual assets to a certain extent. It is widely applied by users in art, games, collectibles and other areas. NFT is stored on the blockchain. The user's digital signature is embedded into the NFT record, which is distributed through a smart contract and verified by the blockchain consensus mechanism, thus solving the problem of identity confirmation in digital asset transactions. This paper makes a review of the main processes and key technologies in NFT applications. First, it introduces the life of NFT: minting, distribution, storage and circulation. Then, the key technologies of NFT are explained, including the blockchain smart contracts and consensus mechanisms in NFT distribution and transaction, the token standards that the minting and transaction process of NFT needs to use, and the important role of NFT in the field of web3. Finally, through the evaluation system of NFT, the problems existing in the current NFT applications and the future research direction are drawn out.
Decentralized Finance (DeFi) is changing the world of finance with innovative solutions and groundbreaking innovations such as the Automatic Market Maker, Flash Loans, and Initial Coin Offering, fundamentally reshaping financial ecosystems and promoting decentralization and financial inclusion beyond Centralized Finance (CeFi). Nonetheless, this innovation brings forth critical concerns including potential centralization, ethical issues, and questions about inclusivity. In this chapter, we explore the finance literature at the frontier, delving into the definitions, metrics, and quantification used to gauge CeFi and DeFi performance. We emphasize the importance of a human-centric perspective in addressing the shortcomings of financial technology, with the aim of enhancing global financial literacy and bridging the digital divide. Additionally, we address the blockchain trilemma that curtails DeFi’s potential positing that an integration of CeFi and DeFi approaches could be the key to overcoming this challenge. Drawing upon insights from ancient Greek philosophy, this chapter concludes by underscoring governance models, be decentralized or centralized, that serve the common good or social welfare, emphasizing that technological progress should distinguish means from ends and be rooted in human values to ensure financial prosperity for all.
Decentralized Finance (DeFi) heralds a transformative moment in the realm of finance, challenging traditional intermediaries with a blockchain-centric blueprint. As DeFi burgeons, the intricate dance between its evolution and security emerges as an area of pivotal significance. This workshop navigates the multifaceted landscape of DeFi, where inherent challenges intertwine with new vulnerabilities, emphasizing the necessity for vigilant evaluations and adaptive measures to ensure the integrity of the ecosystem. It further delves into the ripple effects of regulatory scrutiny and its subsequent influence on DeFi's security matrix. As we stand on the cusp of uncharted territories, the workshop aims to provide a comprehensive discourse on DeFi's security challenges, fortified by interdisciplinary expertise, inviting participants to explore, ideate, and collaboratively forge a path towards a robust and secure DeFi paradigm.
Integrating new technologies such as distributed ledger technology into government systems is a multifaceted process characterized by numerous potential benefits, associated costs, and risks. Previous and existing pilot implementations of blockchain-based software solutions in the public sector have demonstrated that this technology can have varying impacts depending on contextual factors, including the specific type of chosen government service. Furthermore, within each distinct area of public services, the implementation of e-governance technologies can yield different outcomes for various stakeholders, including government entities, public servants, and citizens. Therefore, this article provides a review and analysis of global experiences with the utilization of distributed ledger technology in various domains of the public sector. To achieve this, several countries with advanced expertise in e-governance and the implementation of distributed ledger technology-based solutions were identified. Drawing from the experiences of these nations and considering the unique features, advantages, maturity level of blockchain technology, and existing solutions based on it, general recommendations were formulated regarding the implementation of distributed ledger technology (blockchain) in Ukraine’s public sector.
Raisul Hasan Shahrukh, Tabassinur Rahman, Nafees Mansoor
Blockchain technology has emerged as a disruptive force with transformative potential across numerous industries, promising efficient and automated solutions that can revolutionize traditional systems. By leveraging decentralized ledger systems, blockchain offers enhanced security, transparency, and transaction verification without the need for intermediaries. The finance sector is exploring blockchain-based solutions for payments, remittances, lending, and investments, while healthcare adopts the technology for medical record keeping, supply chain tracking, and data management. Similarly, supply chain management benefits from blockchain's ability to enhance transparency, traceability, and accountability from raw materials to finished products. Other sectors, including real estate, energy, and government, are also investigating blockchain-based solutions to improve efficiency, security, and transparency. Furthermore, smart contracts within the blockchain enable process automation, reducing manual intervention in distribution workflows. AidNeux, a consortium-based blockchain DApp, reimagines the distribution of financial assistance by addressing inefficiencies and opaqueness. Using smart contracts ensures the security and directness of money transfers. Its robust digital identity verification and real-time auditability reduce fraud risks and strengthen accountability, thereby presenting a scalable, transparent solution to problems inherent to conventional financial aid systems.
Md. Raisul Hasan Shahrukh, Md. Tabassinur Rahman, Nafees Mansoor
Blockchain, a decentralized technology that provides unrivaled security, transparency, and process validation, is redefining the operational landscape across numerous industries. This article focuses on the development of an innovative consortium blockchain-based financial distribution application. This paper illuminates the transformative role of blockchain technology in a variety of sectors by drawing on a plethora of academic literature and current industry practices. It demonstrates the diverse applications of blockchain, ranging from remittances to lending and investments in finance to data administration in healthcare and supply chain tracking. The paper reveals the design and potential of a consortium blockchainbased application for financial distribution. Utilizing the capabilities of Hyperledger Besu, the application is tailored to improve security, scalability, and interoperability, thereby contributing to a more integrated financial ecosystem. The investigation sheds light on the combination of consortium blockchain’ controlled access and Hyprledger Besu’ comprehensive functionality, proposing a secure, transparent, and efficient financial transaction environment. The investigation serves as a resource for academics, industry professionals, and policymakers alike, highlighting the vast potential of blockchain technology, enabled by platforms such as Hyperledger Besu, in accelerating the evolution of traditional systems toward a more decentralized, secure, and efficient future.
The advent of Web3 has ushered in a new era of decentralized digital economy, promising a shift from centralized authority to distributed, peer-to-peer interactions. However, the underlying infrastructure of this decentralized ecosystem often relies on centralized cloud providers, creating a paradoxical concentration of value and power. This paper investigates the mechanics of value accrual and extraction within the Web3 ecosystem, focusing on the roles and revenues of centralized clouds. Through an analysis of publicly available material, we elucidate the financial implications of cloud services in purportedly decentralized contexts. We further explore the individual's perspective of value creation and accumulation, examining the interplay between user participation and centralized monetization strategies. Key findings indicate that while blockchain technology has the potential to significantly reduce infrastructure costs for financial services, the current Web3 landscape is marked by a substantial reliance on cloud providers for hosting, scalability, and performance.
Blockchain technology has garnered significant attention from global organizations and researchers due to its potential as a solution for centralized system challenges. Concurrently, the Internet of Things (IoT) has revolutionized the Fourth Industrial Revolution by enabling interconnected devices to offer innovative services, ultimately enhancing human lives. This paper presents a new approach utilizing lightweight blockchain technology, effectively reducing the computational burden typically associated with conventional blockchain systems. By integrating this lightweight blockchain with IoT systems, substantial reductions in implementation time and computational complexity can be achieved. Moreover, the paper proposes the utilization of the Okamoto Uchiyama encryption algorithm, renowned for its homomorphic characteristics, to reinforce the privacy and security of IoT-generated data. The integration of homomorphic encryption and blockchain technology establishes a secure and decentralized platform for storing and analyzing sensitive data of the supply chain data. This platform facilitates the development of some business models and empowers decentralized applications to perform computations on encrypted data while maintaining data privacy. The results validate the robust security of the proposed system, comparable to standard blockchain implementations, leveraging the distinctive homomorphic attributes of the Okamoto Uchiyama algorithm and the lightweight blockchain paradigm.
Purpose This research aims to develop a blockchain smart contract–enabled framework to resolve power imbalance problems in construction payment. Design/methodology/approach This research adopts a design science research method to develop the blockchain smart contract–enabled framework. The authors then develop a prototype system. Finally, the authors evaluate its performance in solving power imbalance-induced payment problems. Findings The results show that the prototype system can resolve power imbalance problems in construction payment by allowing project participants to make transparent and decentralized decisions that are self-enforceable by blockchain smart contracts. Research limitations/implications This study provides theoretical explanations for how blockchain smart contracts can resolve power imbalances in construction payment; based on that, it proposes a novel blockchain smart contract–enabled method to rebalance the power of stakeholders in construction payment. Thus, it contributes to the body of knowledge on blockchain technology and construction payment. Practical implications This study moves beyond a conceptual framework and develops a practical blockchain smart contract system for resolving power imbalances in construction payment, strengthening construction project members' confidence in using blockchain technology. Social implications The proposed blockchain smart contract–enabled solution helps mitigate negative social impacts associated with late payment and non-payment. Furthermore, the research maximizes trust among participants in payment processes to inspire collaborative culture in the construction industry. Originality/value This paper introduces a novel blockchain smart contract integrated method, allowing project stakeholders to resolve power imbalance problems in construction payment through decentralized decision-making.