We analyze the token transfer network on Ethereum, focusing on accounts associated with Alameda Research, a cryptocurrency trading firm implicated in the misuse of FTX customer funds. Using a multi-token network representation, we examine node centralities and the network backbone to identify critical accounts, tokens, and activity groups. The temporal evolution of Alameda accounts reveals shifts in token accumulation and distribution patterns leading up to its bankruptcy in November 2022. Through network analysis, our work offers insights into the activities and dynamics that shape the DeFi ecosystem.
In decentralized finance, any individual can pool their assets into an automated market maker (AMM) -- herein we focus on the constant product market maker (CPMM) -- in exchange for a claim on a fraction of future pool assets and fees earned from the market making operations. This position is represented by a liquidity token, whose prevailing on-chain price is effectively the initial deposited assets. Though this price is well-defined, we treat the liquidity token as a derivative position in the prices of the underlying assets for the CPMM in order to deduce risk-neutral pricing and hedging formulas, not dissimilar to the Black-Scholes result. Adopting this perspective, in a frictionless environment, hedging the CPMM liquidity token under fair valuation should produce a riskless process, which therefore grows at the risk-free rate, something that is not seen in empirical case studies under the prevailing price. With our novel pricing formula, we construct a method to calibrate a volatility to data which provides an updated (non-market) valuation which is consistent with the (near-continuous) replication strategy out-of-sample. We conclude with a discussion of novel AMM design considerations motivated by this derivative-pricing perspective.
Abstract. Constant product markets with concentrated liquidity (CL) are the most popular type of automated market makers. In this paper, we characterize the continuous-time wealth dynamics of strategic liquidity providers (LPs) who dynamically adjust their range of liquidity provision in CL pools. Their wealth results from fee income, the value of their holdings in the pool, and rebalancing costs. Next, we derive a self-financing and closed-form optimal liquidity provision strategy where the width of the LP’s liquidity range is determined by the profitability of the pool (provision fees minus gas fees), the predictable loss (PL) of the LP’s position, and concentration risk. Concentration risk refers to the decrease in fee revenue if the marginal exchange rate (akin to the midprice in a limit order book) in the pool exits the LP’s range of liquidity. When the drift in the marginal rate is stochastic, we show how to optimally skew the range of liquidity to increase fee revenue and profit from the expected changes in the marginal rate. Finally, we use Uniswap v3 data to show that, on average, LPs have traded at a significant loss, and to show that the out-of-sample performance of our strategy is superior to the historical performance of LPs in the pool we consider.
<p>This study investigates the financial psychology of Moroccan investors in cryptocurrency, focusing on the determinants of perceived investment risk. <strong>Design/methodology/approach</strong>: A quantitative survey was conducted among Moroccan investors, and regression analysis was applied to identify the factors influencing their risk perceptions, including transaction fees, complexity, security, anonymity, fast transactions, volatility, and lack of regulation. <strong>Findings</strong>: The analysis reveals that volatility and lack of regulation significantly heighten perceived risk, whereas fast transactions, reduced complexity, and improved security mitigate it. These results suggest targeted strategies to address volatility and regulatory concerns can decrease perceived risks and attract more investors. <strong>Originality</strong>: This research provides new insights into the interplay of technological, regulatory, and psychological factors influencing investment behavior in a developing country context, specifically Morocco, thereby contributing to the broader literature on financial inclusion and technology adoption. <strong>Research limitations/implications</strong>: The study's limitations include its reliance on self-reported data and the specific focus on Moroccan investors, which may limit the generalizability of the findings. <strong>Practical implications</strong>: By addressing identified risk factors, policymakers and cryptocurrency platforms can develop targeted interventions to reduce perceived risks, thus encouraging broader investment and enhancing financial inclusion. <strong>Social implications</strong>: Improving cryptocurrency literacy and addressing regulatory challenges can promote more inclusive financial participation, fostering economic growth and reducing financial disparities in Morocco.</p><p><strong>JEL:</strong> D81, D91, E44, G11, G23, G41, O16</p><p>Cette étude examine la psychologie financière des investisseurs marocains en cryptomonnaies, en se concentrant sur les déterminants clés de la perception du risque d'investissement. <strong>Conception/méthodologie/approche</strong> : Une enquête quantitative a été menée auprès d'investisseurs marocains, et une analyse de régression a été utilisée pour identifier les facteurs influençant leurs perceptions du risque, notamment les frais de transaction, la complexité, la sécurité, l'anonymat, la rapidité des transactions, la volatilité et les lacunes réglementaires. <strong>Résultats</strong> : La volatilité et l'absence de réglementation augmentent significativement le risque perçu, tandis que la rapidité des transactions, la réduction de la complexité et l'amélioration de la sécurité le réduisent. Ces résultats suggèrent que le traitement des questions de volatilité et des préoccupations réglementaires pourrait atténuer les risques et encourager un investissement plus large. <strong>Originalité/valeur</strong> : Cette recherche apporte de nouvelles perspectives sur l'interaction des facteurs technologiques, réglementaires et psychologiques qui influencent le comportement d'investissement au Maroc, contribuant ainsi à la littérature plus large sur l'inclusion financière et l'adoption des technologies. <strong>Limites de la recherche</strong> : La dépendance aux données auto-déclarées et le focus sur les investisseurs marocains peuvent limiter la généralisation des résultats. <strong>Implications pratiques</strong> : Les décideurs politiques et les plateformes de cryptomonnaies peuvent utiliser ces informations pour développer des interventions ciblées visant à réduire les risques perçus et à promouvoir l'inclusion financière. <strong>Implications sociales</strong> : Améliorer la littératie en cryptomonnaies et relever les défis réglementaires pourrait favoriser une inclusion financière et une croissance économique plus large au Maroc.</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0715/a.php" alt="Hit counter" /></p>
В статье уточнены теоретико-методологические положения по поводу механизмов децентрализованного финансирования (DeFi) и влияния DeFi на традиционные финансовые институты и развитие финансовых отношений. Раскрыто соотношение традиционного и цифрового финансирования, представлены ключевые определения. Обоснованы современная архитектура децентрализованного финансирования, экономический механизм дезинтермедации в системе DeFi через элиминацию посреднических рисков. Описаны возможности децентрализованного финансирования для экономического развития, обращено особое внимание на его влияние на повышение финансовой доступности. Перечислены риски децентрализованного финансирования, аргументировано, что при принятии решений по политике его регулирования в Российской Федерации важно учитывать влияние на традиционных финансовых посредников в условиях нестабильности внешней среды и незрелости национальных финансовых институтов. Представлена организационно-экономическая схема, характеризующая влияние DeFi на традиционные финансовые институты. Рассмотрена возможность выстраивания экономически безопасной модели суверенного децентрализованного финансирования в России, для чего рекомендовано обеспечить суверенность каждого ключевого элемента архитектуры DeFi, опираясь на российские технологии и оборудование, а также соблюдая отечественные требования в области финансового мониторинга и валютного контроля. Необходим полноценный надзор со стороны Банка России. Разработка соответствующих суверенных решений еще далека от завершения, однако на основе накопленного практического опыта и по мере формирования пула суверенных инструментов и технологий появится возможность для полноценного внедрения DeFi в российскую финансовую систему и механизмы ее регулирования. The publication clarifies the theoretical and methodological provisions regarding the mechanisms of decentralized finance (DeFi) and describes the impact of DeFi on traditional financial institutions and the development of financial relations. The relationship between traditional and digital financing is revealed, and key definitions are presented. The modern architecture of decentralized finance is substantiated, the economic mechanism of disintermediation in the DeFi system through the elimination of intermediary risks is substantiated. The possibilities of decentralized financing for economic development are described, with special attention paid to its impact on increasing financial inclusion. The risks of decentralized finance are listed, and it is argued that when making decisions on the policy of its regulation in the Russian Federation, it is important to consider the impact on traditional financial intermediaries in conditions of instability of the external environment and the immaturity of national financial institutions. An organizational and economic diagram characterizing the impact of DeFi on traditional financial institutions is presented. The possibility of building an economically safe model of sovereign decentralized finance in Russia is considered, for which it is recommended to ensure the sovereignty of each key element of the DeFi architecture, relying on Russian technologies and equipment, as well as complying with domestic requirements in the field of financial monitoring and currency control. Full supervision by the Bank of Russia is required. The development of relevant sovereign solutions is still far from complete, however, based on the accumulated practical experience and as the pool of sovereign instruments and technologies is formed, it will be possible to fully implement DeFi into the Russian financial system and its regulatory mechanisms.
Mark Rüetschi, Carlo Campajola, Claudio J. Tessone
This paper creates a new taxonomy of Decentralized Finance (DeFi) protocols following the methodology specifically tailored to information systems set out by Nickerson et al. (2013). This taxonomy provides a tool to classify DeFi protocols, allowing for a structured comparison with traditional financial mechanisms in the present-day (as included in this paper), as well as providing a repeatable procedure in order to track development of the space in the future. Further, the clustering of classified protocols facilitates the rapid identification of similar protocols beyond the mere identification of functions. The dimensions and characteristics of the taxonomy are discussed, as well as qualitative observations concerning the current DeFi landscape. Comparisons with traditional financial mechanisms highlight not only instances of one-to-one replacement of centralized instruments with decentralized alternatives, but also new innovations and products better suited to DeFi environments. Risks and opportunities around these inventions are also discussed.
The rapid emergence of Decentralized Finance (DeFi), driven by blockchain technology and smart contracts, is transforming the landscape of the financial industry by enabling peer-to-peer financial services without traditional intermediaries. This paper examines the impact of DeFi on traditional banking systems, focusing on the opportunities, challenges, and future directions of this revolutionary financial model. We explore how DeFi disrupts traditional financial intermediation by offering faster, cheaper, and more transparent financial services, potentially reducing the dominance of conventional banks. The study addresses critical issues such as regulatory challenges, including compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements, and the importance of consumer protection in a decentralized environment. We also investigate collaboration opportunities between traditional banks and DeFi platforms, which could lead to innovative financial products and services. To provide a comprehensive analysis, the paper employs a mixed-method approach, combining a review of recent literature, empirical data, case studies, and expert interviews. The findings highlight significant gaps in current regulatory frameworks and emphasize the need for a balanced approach that fosters innovation while ensuring financial stability and consumer safety. This study concludes by offering recommendations for policymakers, financial institutions, and DeFi developers to harness the potential of DeFi while addressing its inherent risks, paving the way for the sustainable growth of decentralized finance in the broader financial ecosystem.
This chapter explores the significance of blockchain technology within various organizations, specifically focusing on its transformative potential within the banking sector in India. It delves into the pivotal role that blockchain technology plays in enhancing transparency, security, and operational efficiency across financial institutions. Furthermore, the chapter investigates the profound impact of blockchain technology on the Indian banking sector, shedding light on its ability to streamline processes, mitigate fraud, and facilitate seamless transactions. It examines the challenges and opportunities associated with adopting blockchain technology, emphasizing the need for regulatory frameworks and industry collaboration to harness its full potential effectively. Moreover, integrating blockchain technology within the metaverse ecosystem presents a novel paradigm for banking services, enabling immersive and secure financial interactions in virtual environments. The chapter explores the convergence of blockchain technology and the metaverse, highlighting its implications for customer engagement, digital identity management, and decentralized finance initiatives. This chapter provides valuable perspectives on the strategic implications of blockchain and metaverse integration within the Indian banking sector through a comprehensive analysis of case studies and industry insights. It offers practical recommendations for stakeholders to navigate the evolving landscape, capitalize on emerging opportunities, and address the challenges inherent in leveraging blockchain technology within the metaverse-driven banking ecosystem.
The pace of technological advancement over the last three decades has led to a slew of new companies adopting the latest technologies and marrying them to innovative new business models to threaten more traditional businesses. Start-ups such as Google, Meta and Amazon, to name a few, have revolutionised the way consumers engage with service providers, consume information and purchase goods. Fintech start-ups have also threatened to change the way financial services are provided, albeit with varying degrees of success due to barriers such as consumer trust in new brands, regulatory compliance and the financial strength of banks to build those same services internally. There is no denying, however, that custodian banks today face many challenges that are slowly eroding margins. Regulators are demanding shorter settlement times, clients are demanding greater control over their accounts, staff costs are rising and cyber security threats are increasing. This paper seeks to highlight some of the threats the industry is facing while exploring the role that artificial intelligence (AI) may be able to play in addressing some of these challenges. It offers a broad overview of not just areas of application but also weaknesses of the technology that the bank needs to be aware of and also possible issues with implementation. It also seeks to highlight the fact that AI is not a single technology, unlike distributed ledger systems. There are many nuances to AI, such as convolution neural networks, natural language processing and generative AI, and the judicious application of the right nuance of AI to the problem will be key to a successful implementation.
This paper explores a monetary experiment, the adoption of Bitcoin as legal tender in El Salvador in 2021, to analyse the impact of digital currencies on international capital flows. Using a difference-in-differences approach, we find that, instead of making transfers easier, El Salvador’s official cross-border financial activity has decreased after the monetary change. This finding may reflect an increase in uncertainty. However, it is also in line with findings that link digital assets to illegal activity as previously officially recorded financial transfers may have been replaced by unrecorded activities.
Longjin Yu, Man Ji, Fazli Haleem, Yilong Gong · 6 authors
Small and medium-sized enterprises (SMEs) play a critical role in promoting the development of China’s real economy and improving national productivity, but their financing still faces challenges. In recent years, supply chain finance (SCF) has become one of the most important solutions to SMEs’ financing difficulties. Promoting the digital and innovative development of SCF can better meet the financing needs of SMEs. This study is based on a case study of Zhejiang MYbank Co., Ltd. (MYbank) in Hangzhou, China, which is a representative institution of digital supply chain finance development in China and committed to realizing the digital innovation development of SCF. Based on MYbank’s financial index data from 2018 to 2022, the implementation effect of MYbank’s digital supply chain finance is quantitatively analyzed from the perspectives of SMEs and MYbank. The main findings are as follows.(1) In the practice of digital supply chain finance, MYbank implements the new concepts of SCF decentralization and full coverage of supply chain links while enhancing the sustainability of SCF. (2) For SMEs, MYbank’s digital supply chain finance development has led to an increase in the financing scale and financing availability of SMEs. (3) The analysis of MYbank’s comprehensive benefits shows that the digital innovation development of SCF effectively increased the overall economic value of the enterprise during the period of 2018–2022. Based on these findings, this study provides implications for commercial banks and other financial institutions to develop digital supply chain finance.
The chapter explores the transformative potential of artificial intelligence (AI) in the realm of decentralized finance (DeFi), focusing on its application in fraud detection and prevention. Through an in-depth examination of AI-driven methodologies and techniques, particularly machine learning models, natural language processing (NLP), and graph analytics, this study explores how AI is reshaping the landscape of fraud detection within decentralized financial ecosystems. Using a conceptual framework, this study investigates the current state-of-the-art techniques employed in AI-driven fraud detection and prevention in DeFi. It examines the methodologies and applications driving the adoption of AI, elucidating its efficacy in identifying fraudulent activities and enhancing the security of DeFi platforms.
Decentralized finance (DeFi) is one of the most promising technologies currently developing on blockchain infrastructure.It offers an innovative approach to providing financial services, allowing transactions to be conducted without the involvement of traditional financial intermediaries, such as banks or payment systems.This is achieved through the use of decentralized protocols and smart contracts that automatically execute the terms of agreements.Such decentralization can have a significant impact on international trade, creating new opportunities for businesses and reducing the costs of international operations.The main advantages of using DeFi in international trade include reducing transaction costs, speeding up payment processing, and ensuring transparency in transactions.By eliminating the need for intermediaries, businesses can conduct payments directly with each other, which significantly shortens transaction processing time and minimizes commission fees.This is particularly important in the context of the global economy, where the speed and efficiency of financial transactions are critical to the success of companies in international markets.Moreover, decentralized finance can promote financial inclusion by providing access to financial services in regions with weak banking infrastructure.For small and medium-sized enterprises in developing countries, DeFi opens up opportunities to enter global markets without the need to rely on traditional banking institutions, which are often inaccessible or too expensive for these businesses.In such cases, DeFi becomes an important tool for stimulating economic growth and promoting international trade in these regions.However, despite the significant advantages of DeFi, several challenges limit its widespread adoption in international trade.The main ones include legal
The popularity of decentralized finance has drawn attention to liquidity mining (LM). In LM, a user deposits her cryptocurrencies into liquidity pools to provide liquidity for exchanges and earn yields. Different liquidity pools offer varying yields and require different pairs of cryptocurrencies. A user can exchange a cryptocurrency for another with some exchange costs. Thus, an LM solution consists of exchange transactions and deposit transactions, guaranteeing (1) each exchange transaction must exchange one cryptocurrency for another at a specific rate (i.e., the exchange constraint); (2) the amounts of cryptocurrencies deposited in a liquidity pool must exceed the required threshold (i.e., the minimum constraint); (3) each deposit transaction must deposit a specific pair of cryptocurrencies at a certain rate in a liquidity pool (i.e., the deposit constraint); and (4) the cryptocurrencies used in the solution do not exceed the cryptocurrencies that the user has (i.e., the budget constraint). Selecting the most profitable LM solution is challenging due to the vast number of candidate solutions. To address this challenge, we define the yield maximization liquidity mining (YMLM) problem. Given a set of liquidity pools, a set of the user's cryptocurrencies, a set of exchange rates, and an evaluation function, YMLM aims to find an LM solution with maximal yields, satisfying the minimum, exchange, deposit, and budget constraints. We prove that YMLM is NP-hard and cannot be solved by algorithms with constant approximation ratios. To tackle YMLM, we propose two algorithms, namely YMLM\_GD and YMLM\_SK, with parameterized approximation ratios. Extensive experiments on both real and synthetic datasets show that our approaches outperform the baselines in yields.
The financial sector is going through a major transformation and evolution with the emergence of Decentralized Finance (DeFi). It is a modern concept that is reshaping the traditional financial landscape and thus changing traditional financial structures. This research delves into the term “Decentralized Finance” by exploring its various advantages, associated challenges, and future patterns and trends. Leveraging blockchain technology, DeFi offers new financial services without intermediaries that in turn enhance financial inclusion, autonomy, and economic empowerment of individuals, though this also entails enormous risks and challenges, including vulnerability to smart contract vulnerabilities, regulatory uncertainty, and market volatility. This research also attempts, through a systematic literature review, to identify the most significant opportunities for DeFi, such as democratized access to financial services, lower transaction fees, and increased liquidity. Additionally, this research highlights the key challenges facing the development of DeFi, such as limitations on its ability to handle large transactions, concerns about user data protection, and the need to adhere to regulatory standards. The paper concludes with a view and insights into the future of DeFi, emphasizing the importance of regulatory clarity, technological innovation, and community governance in shaping the trajectory of DeFi. This analysis contributes to gaining a deeper understanding of the potential and capabilities of DeFi, and provides stakeholders with indispensable insights to navigate the dynamics of DeFi.
Purpose Fiat money production necessitates physical commodities, increasing costs and its flow is challenging to monitor, making it vulnerable to criminal exploitation. Cryptocurrencies offer decentralized solutions, but their decentralization has led to illegal activities. Current cross-border transactions face high costs, resource intensity and lack of instant currency transfers. Offline transactions are essential in unreliable networks. Design/methodology/approach Here, the authors proposed the methodology to perform offline transactions based on card, quick response (QR) code and a foreign transaction framework with universal identification (UID) to perform cross-border transactions using blockchain-dependent central bank digital currencies (CBDCs). Implications for the financial system are also analyzed. Findings The proposed CBDC framework reduces illegal transactions, corruption and the cost of producing fiat money; eases overseas transactions; and eventually increases international tourism, trade and business between countries. It also reduces the processing fees. Offline framework found useful for performing retail-level transactions. Research limitations/implications The research methodology may face limitations due to diplomatic relations, political instability, sanctions and the need for robust offline transaction infrastructure. Practical implications The proposed CBDC framework simplifies debt and insurance management, tax collection, international trade, tourism and global stock market participation. However, implementing CBDCs in low-income countries presents challenges like extensive training, infrastructure and user acceptance issues. Social implications The adoption of CBDCs can enhance financial stability by reducing corruption and illegal transactions through improved traceability and monitoring, thereby curbing activities like terrorism. Originality/value Common framework for foreign transactions is based on the UID, and offline transaction framework is based on the sender’s QR code for multiple user applications.
This paper intends to examine the existence of riba elements (interest) in the products of cryptocurrency exchange companies locally in Malaysia and the international. Two of the chosen international cryptocurrency exchange companies, namely Huobi and KuCoin, and one local company, Luno Malaysia Sdn. Bhd., were analyzed based on their websites and applications. It was found that riba exist in the products offered by international cryptocurrency exchange companies, specifically crypto loans, and lending. Meanwhile, the local one does not offer a product that generates riba. It can be concluded the two products that generate riba seem to be mirroring foreign exchange trading, which comprises leverage and margin in loans and lending. Hence, it is suggested not to subscribe to lending and loans products offered by international cryptocurrency exchange companies. This study implies for Muslim investors, who deal with cryptocurrency. It is recommended to do future research on awareness of riba in the products of cryptocurrency exchanges among Muslim investors.
Digitalization has fundamentally changed the global economy and will continue to do so. This study investigates how the US Federal Reserve and US Treasury may work together to use decentralized finance (DeFi) systems to promote economic growth in local communities. The study looks into the potential for transformation and the difficulties in incorporating DeFi into conventional financial institutions. Research shows that the use of cash as a means of payment is widely expected to decline in the future. As a result, the public’s ability to make transactions using central bank money may decline rapidly. This study&#039;s goals are to solve economic issues, promote innovation, and increase financial efficiency. The use of in-depth interviews, theme analysis, case studies, stakeholder perspectives, comparative analysis, and document analysis is suggested as part of a qualitative research methodology. The goal of these approaches is to offer a sophisticated comprehension of the dynamics of collaboration and the consequences of DeFi integration in the context of the Federal Reserve-Treasury relationship. Important data sources that are necessary to answer the research question are indicated, such as US Treasury statistics, Federal Reserve publications, DeFi platforms, and International Monetary Fund economic indicators. Informed decision-making and policy formation may pave the way for a more inclusive and efficient financial ecosystem, which will eventually drive regional economic growth in the United States and promote monetary sovereignty for the aforementioned monetary entities. This can be achieved by investigating creative collaboration tactics between the Federal Reserve and the US Treasury.
An Pham Ngoc Nguyen, Martin Crane, Thomas Conlon, Marija Bezbradica
Herding behavior has become a familiar phenomenon to investors, with potential dangers of both undervaluing and overvaluing assets, while also threatening market stability. This study contributes to the literature on herding behavior by using a recent dataset, covering the most impactful events of recent years. To our knowledge, this is the first study examining herding behavior across three different types of investment vehicle and also the first study observing herding at a community (subset) level. Specifically, we first explore this phenomenon in each separate type of investment vehicle, namely stocks, US ETFs and cryptocurrencies, using the Cross-Sectional Absolute Deviation model. We find mostly similar herding patterns for stocks and US ETFs. Subsequently, the same experiment is implemented on a combination of all three investment vehicles. For a deeper investigation, we adopt graph-based techniques including the Minimum Spanning Tree and Louvain community detection to partition the combination into smaller subsets to detect herding behavior for each subset. We find that herding behavior exists at all times across all types of investment vehicle at a subset level, although perhaps not at the superset level, and that this herding behavior tends to stem from specific events that solely impact that subset of assets. Lastly, we explore herding by examining the financial contagion effects between these types of investment vehicle. Results show that US ETFs not only have a tendency to propagate similar trading behaviors in stocks and especially cryptocurrencies but also show self-reinforcing herding behavior, acting as drivers of their own trends.
This paper presents new techniques for private billing in systems for privacy-preserving online advertising. In particular, we show how an ad exchange can use an e-cash scheme to bill advertisers for ad impressions without learning which client saw which ad: The exchange issues electronic coins to advertisers, advertisers pay publishers (via clients) for ad impressions, and publishers unlinkably redeem coins with the exchange. To implement this proposal, we design a new divisible e-cash scheme that uses modern zero-knowledge proofs to reduce the ad exchange's computational costs by roughly 250x compared to the previous state-of-the-art. With our new e-cash scheme, our private-billing infrastructure adds little overhead to existing private ad-retargeting systems: less than 63 ms of latency, negligible client computation, less than 3.2 KB of client communication, and a combined server operating cost (advertisers, publishers, and exchange) of less than 1% of ad spend, an over 5x savings compared to the previous state-of-the-art.
Abstract Decentralized finance (DeFi) has emerged to offer traditional financial services such as lending, borrowing, and trading without intermediaries (e.g., banks). DeFi transactions are typically executed using a special digital class of contracts called smart contracts. These contracts are self-executing and hard-coded directly on a blockchain. We observe the emergence of a new class of voluntary audits that evaluate the integrity of these contracts. Using a hand-coded sample of about 8,500 smart contract audit reports, we provide some of the first evidence showing that (1) these audits are pervasive, (2) the audit firm market is composed of new technical audit firms, (3) the scope of these audits can span a variety of contract features, (4) the audit inputs and outputs differ substantively from those of conventional financial audits, and (5) the market reacts positively to the release of these audit reports, suggesting that these reports are value-relevant. These findings highlight the demand for novel assurance services driven by blockchain technology.
The emergence of decentralized finance (DeFi) has transformed traditional financial systems by leveraging blockchain technology to offer decentralized solutions for trading and liquidity provision. Within the CORE Chain ecosystem, the COREDAO VIP token plays a pivotal role in facilitating liquidity pooling and automated trading across various COREDAO-based tokens. This research investigates the impact of COREDAO VIP token within decentralized exchanges (DEX) such as ICECREAMSWAP, LFGSWAP, SHADOWSWAP, and ARCHERSWAP. By analyzing its integration into these platforms, the study explores how COREDAOVIP enhances liquidity management, reduces slippage, and supports automated trading strategies. Key aspects examined include the token's utility, governance implications, and its influence on trading dynamics within the COREDAO ecosystem. Through comprehensive analysis and empirical insights, this research aims to provide a nuanced understanding of COREDAOVIP token's role in advancing decentralized finance practices and its implications for future blockchain-based financial ecosystems.
Subject. This article discusses the development of the conceptual framework in the theory of finance in the context of digitalization. Objectives. The article aims to review and summarize the academic literature on decentralized finance (DeFi) and assess their impact on the development of the global financial system. Methods. For the study, we used the methods of comparative, logical and conceptual analyses, expert assessment, and the heuristic modeling. Results. Based on a review of scientific foreign and Russian financial literature regarding the concept of Decentralized Finance, the article finds that there is no single approach to this concept yet. Most authors associate decentralized finance with the use of innovative financial instruments based on distributed ledgers, and almost all researchers believe that the development of decentralized finance will lead to a change in the global financial architecture without the participation of financial intermediaries. The article proposes to separate the concepts of Decentralized Finance, Decentralized Financial Instruments, Decentralized Financial Technologies, which can help organize and sort out the research vocabulary, taking into account the transformation and changes in the global financial architecture. Conclusions and Relevance. The development of information technology has a serious impact on the financial sector and is accompanied by the transformation of old concepts and the emergence of new ones, including decentralized finance. The results expand the theoretical apparatus of modern financial theory, can be applied in areas related to the use of decentralized financial technologies and financial instruments, as well as in the formation of new training courses and for understanding trends in the development of the financial sector.
Omoshola S. Owolabi, Prince C. Uche, Nathaniel T. Adeniken, Emmanuel Hinneh · 5 authors
This research examines the integration of decentralized finance (DeFi) in supply chain finance and its potential to revolutionize traditional financial systems. The study aims to provide an understanding of how DeFi can overcome the limitations of traditional supply chain finance methods and create new opportunities for businesses. The research starts by discussing the challenges faced by supply chain finance and introduces DeFi as a solution. Using blockchain technology and smart contracts, DeFi enables a transparent and trustworthy system for real-time tracking of financial transactions and assets, this transparency reduces the risk of fraud and enhances decision-making. The study explores how DeFi can streamline and automate various supply chain finance processes, such as invoice factoring, trade finance, and payments, using smart contracts and decentralized applications. However, there are challenges and limitations that need to be addressed for successful implementation. The implications of DeFi for the US financial system, including risks to traditional institutions and regulatory considerations, are also discussed. The research proposes potential solutions and prospects for DeFi in supply chain finance. Additionally, the research examines the potential impact of DeFi on the US economy and job market, highlighting the emergence of new job roles and skills. The study concludes by providing key findings and recommendations for stakeholders, including companies, policymakers, and researchers. The integration of DeFi in supply chain finance offers an opportunity to transform financial operations and relationships within the supply chain. Collaboration, innovation, and strategic efforts from all stakeholders are crucial for realizing the potential of DeFi. The US should take a proactive approach by developing regulatory frameworks, fostering research and development, promoting partnerships, and investing in education and talent development to position itself as a global leader in supply chain finance innovation.