Blockchain Papers

Josephine Nartey

No abstract is available for this record.

Roberto de Vera, Yun-Hwan Kim

No abstract is available for this record.

Elisa Facciotti, Domenica Federico, Antonella Notte

No abstract is available for this record.

David Andolfatto

The decentralized autonomous organization (DAO) represents a radically new way to manage databases. Since money and payments are all about managing databases and since banks play a central role in money and payments, DAO-based money and payments systems are potentially a disruptive force in the banking system—which includes central banks.

Otto Lucius

No abstract is available for this record.

Neha Sabharwal, Neha Solanki

DeFi, as a most revolutionary movement in the finance sector, offers an open, permission less, and translucent financial ecosystem working on blockchain technology. The present study thus explores the impact that DeFi creates on the traditional banking systems while laying down the opportunities and challenges it carries with it. The study will set to outline a deep understanding of how DeFi affects traditional financial systems especially the critical topics including transparency, cost-effectiveness, and accessibility. It also explores the regulatory obstacles and the hazards associated with an expanded DeFi. It also explores the regulatory obstacles and associated hazards that come with DeFi's expansion. The research's conclusions are meant to educate financial institutions, legislators, and software developers on the direction of finance and possible ways to incorporate DeFi into established financial systems.

Durba Dutta

DeFi is a new concept that disrupts the conventional finance industry by employing blockchain and decentralized structures. This critical evaluation aims to discuss how DeFi can disrupt the banking system and provide more transparency, efficiency, and inclusion. Based on the literature review of the works of leading scholars and the DeFi platform case analysis, the study reveals that DeFi has certain benefits compared to traditional financial systems, including lower fees for transactions and a more open financial system for the population. Nevertheless, the research also identifies some threats that may impact the adoption of DeFi including regulatory challenges and security threats. The study shows that despite the fact that DeFi is capable of revolutionizing the financial services industry, it will have to coexist with the traditional banking sector and one has to look at the regulatory and security issues. As shown above, there are several problems that deserve more attention and only more research and collaboration between various stakeholders will allow to unleash the full potential of DeFi. This paper helps to enrich the knowledge about DeFi and its role in the new financial paradigm and gives some ideas about the future of financial industry.

Wei Jiang, Tao Li

Corporate governance encompasses a set of processes, customs, policies, laws, and institutions that affect how a corporation is directed, administered, or controlled. Technology both enhances and disrupts the traditional board-centric corporate governance system, enhancing efficiency and transparency while introducing new challenges and risks. In this work we examine three key themes comprehensively: the redefinition of information and information asymmetry through the generation of and access to big data; blockchain technology’s transformative potential for aggregating preferences and exercising shareholder voting rights while blurring the line between securities and tokens; and the impact of smart contracts and their underlying infrastructure on the expansion of contracts and the implementation of decentralized governance through decentralized autonomous organizations. These innovative technological solutions empower stakeholders to exercise governance rights effectively, but their complexity also gives rise to new barriers and inequalities. As technology evolves, collaboration among researchers, policymakers, and practitioners is imperative to ensure that corporate governance remains effective and responsive to the current dynamic business environment.

Martin Brennecke, Eduard Hartwich, Emanuela Podda, Alexander Rieger

No abstract is available for this record.

Aditya Kapoor

No abstract is available for this record.

Tobias C. Hoschka

No abstract is available for this record.

Yuanyuan Zhang, Stephen Chan, Jeffrey Chu, Xin Liao · 5 authors

Decentralized Finance (DeFi) represents an emerging sector within the cryptocurrency space. DeFi is currently one of the most groundbreaking and disruptive technologies impacting upon the centralized finance systems, bringing with it many distinctive features and huge potential. In this chapter, we present stylized facts on DeFi and shed light on the broader empirical features of market efficiency, volatility clustering, leverage effects, and the return volume relationship of this market.

Augustin Valéry

No abstract is available for this record.

Dale Satre

Global finance is redefining grand strategy and influence in the 21st century. There is no practical alternative today that has the scale to challenge the U.S.-led financial system. With it, American influence has been projecting its strategic goals through sanctions, causing unease among international friends and foes alike, applying a pressure referred to as “weaponized interdependence.” However, state-backed digital currencies, developed for efficiency and financial inclusion, are now being considered around the world as a defense against being cut off from the global financial system—and by extension American sanctioning power. This paper will analyze the concept of weaponized interdependence in payment systems, the British financial empire as a historical precedent for it, and how America came to inherit this enviable position. This paper will also analyze what central bank digital currencies (CBDCs) are, the challenge they pose to American financial power, and offer an initial down payment on policy solutions that policymakers may consider to preserve American financial power.

Timothy Dombrowski, V. Carlos Slawson

Can the general structure of a mortgage-backed security (MBS) contract be programmatically represented through the use of decentralized autonomous organizations (DAOs)? Such an approach could allow for the portfolio of loans to be managed by investors in a trustless and transparent way. The focus and scope of this paper is to explore the potential for applying the tools of modern fintech, such as asset tokenization, smart contracts, and DAOs, to reconstruct traditional structured products that have a greater degree of transparency and traceability. MBS investors face considerable value uncertainty as time increases between the actual occurrence (or non-occurrence) of cash flows and subsequent reporting. Given that an MBS is a financial contract, it should be expressible logically using the Algorithmic Contract Types Unified Standards (ACTUS). Since each underlying mortgage in an MBS derives its cash flows in a prescribed way over the life of the contract, implementation on a public blockchain could enable real-time ratings systems, improving market efficiency. We explore the potential for creating formal algorithmic designs of MBS-DAOs that incorporate individual mortgages, the underlying real estate assets (collateral), and any loan guarantees.

Bin Liu, Tina Prodromou, Sandy Suardi, Caihong Xu

No abstract is available for this record.

Sabrina Leo, Andrea Delle Foglie, Luca Barbaro, Edoardo Marangone · 6 authors

Credit Guarantee Schemes (CGSs) are crucial in mitigating SMEs' financial constraints. However, they are renownedly affected by critical shortcomings, such as a lack of financial sustainability and operational efficiency. Distributed Ledger Technologies (DLTs) have shown significant revolutionary influence in several sectors, including finance and banking, thanks to the full operational traceability they bring alongside verifiable computation. Nevertheless, the potential synergy between DLTs and CGSs has not been thoroughly investigated yet. This paper proposes a comprehensive framework to utilise DLTs, particularly blockchain technologies, in CGS processes to improve operational efficiency and effectiveness. To this end, we compare key architectural characteristics considering access level, governance structure, and consensus method, to examine their fit with CGS processes. We believe this study can guide policymakers and stakeholders, thereby stimulating further innovation in this promising field.

Rocco Francesco Vittorio Di Terlizzi

In recent years, Decentralized Autonomous Organizations (DAOs) have advanced significantly, transforming organizational operations through blockchain technology by replacing traditional hierarchical management with community-driven decision-making via smart contracts. Despite early skepticism and regulatory challenges, DAOs have evolved into various forms, particularly Investment DAOs, which facilitate pooled asset management and democratize investment opportunities across sectors such as Web3 and real estate tokenization. Given this evolution, a comprehensive financial framework is urgently needed to address the specific governance structures of DAOs. Traditional financial metrics like the Current Ratio, Cash Flow Management, and Liquidity Coverage Ratio (LCR) must be adapted to the unique dynamics of decentralized organizations, promoting a deeper understanding of financial health and operational efficiency while ensuring transparency and accountability. As DAOs now manage treasuries exceeding $40 billion, robust financial oversight is essential. Integrating traditional accounting principles with blockchain’s transparency can revolutionize financial reporting, risk management, and governance, enabling stakeholders to make informed decisions and fostering trust and collaboration within the DAO ecosystem. This fusion of accounting methods and technology will not only enhance internal governance but also ensure sustainable growth. In conclusion, the increasing prominence of DAOs within the financial landscape highlights the need for forward-looking financial structures that blend established accounting practices with cutting-edge technological solutions, ensuring their continued success in a rapidly changing environment.

Abhishek Sharma

This paper explores the transformative impact of Decentralized Finance (DeFi) on traditional financial institutions, offering novel insights into how blockchain-based financial systems are reshaping the global economy. By leveraging smart contracts and distributed ledger technology, DeFi eliminates intermediaries, democratizing access to financial services and enabling more transparent, efficient, and inclusive financial ecosystems Decentralized Finance (DeFi) represents a paradigm shift in the financial landscape, offering an alternative to traditional financial institutions by leveraging blockchain technology and smart contracts. This paper explores the disruptive potential of DeFi in areas such as banking, lending, trading, and asset management. Through a decentralized and transparent framework, DeFi applications aim to eliminate intermediaries, reduce transaction costs, enhance security, and provide financial inclusivity. The study examines key DeFi protocols, challenges like regulatory uncertainties and security vulnerabilities, and their implications on the global financial system. The findings suggest that while DeFi holds transformative potential, achieving widespread adoption requires addressing scalability, security, and regulatory hurdles. The paper concludes by assessing DeFi's role in shaping the future of finance, emphasizing its potential to democratize financial services and challenge traditional models of operation. Unique contributions of this research include the introduction of a comprehensive framework that evaluates DeFi protocols across multiple dimensions, such as security, scalability, and user adoption. Additionally, the paper provides a comparative analysis of traditional finance and DeFi mechanisms, emphasizing key advantages like reduced transaction costs, enhanced financial inclusion, and decentralized governance models. Furthermore, this study uncovers novel insights into potential risks, including regulatory challenges, and proposes innovative strategies for mitigating these risks. Ultimately, the paper highlights DeFi’s potential to redefine financial infrastructure while also acknowledging the hurdles that must be overcome for widespread adoption.

Carmen Toderaşcu, Vlad Gabriel NICOLĂESCU

In this article, we discuss the potential of Web3 in the context of decentralized finance (DeFi). Web3, as the new generation of the internet and new approaches, comes with a decentralized architecture and increased security through the use of blockchain technology. These characteristics make Web3 a suitable environment for DeFi, which is a decentralized financial system based on blockchain technology and smart contracts to provide financial services. DeFi eliminates the need for intermediaries in financial transactions and can provide access to financial services globally, even for those who do not use traditional financial instruments. We address the various aspects of DeFi that are possible through the use of Web3, such as payments, loans, and digital asset exchanges. We also aim to address how Web3 can solve some of the current issues facing DeFi, such as scalability and interoperability. Additionally, we discuss the regulatory perspective, how these new financial systems bring and create new risks, and what the management tools for these risks can be from two perspectives: financial stability and the protection of consumers/investors, and financial education as a proactive element of self-management of increasingly complex new financial concepts. DeFi is one of the most innovative and exciting applications of blockchain technology that can transform and improve the global financial system. However, DeFi is still in its early stages and faces certain challenges, such as scalability and interoperability between different DeFi platforms. Web3 can play a significant role in addressing these challenges by creating a decentralized environment that can facilitate value transfer and interconnectivity between different DeFi platforms. Web3 can also enhance the security and transparency of DeFi platforms by leveraging blockchain technology and smart contracts. The emergence of DeFi also brings new risks and challenges, particularly in terms of regulation and consumer protection. Financial authorities must adopt a proactive approach to regulate these new financial systems and ensure their stability and security, while also promoting financial education and awareness among consumers and investors

David Krause

No abstract is available for this record.

Daniel Liebau

No abstract is available for this record.

Jason Scharfman

No abstract is available for this record.

Rebecca Rettig, Michael Mosier, Katja Gilman

Combating illicit financial activity in permissionless blockchain-based financial systems — referred to as “decentralized finance” or “DeFi” — has challenged regulators and policymakers. Traditional financial integrity laws and regulations, comprised of antimoney laundering (“AML”)/countering the financing of terrorism (“CFT”) and sanctions, attach to intermediaries, including, with respect to AML/CFT obligations, those intermediaries the Bank Secrecy Act (“BSA”) defines as “financial institutions.” The current laws, however, are not amenable to intermediary-less systems like DeFi. This paper proposes a framework (see Section III) to effectively detect, deter and prevent illicit financial activity in DeFi, while preserving the technology as permissionless, neutral infrastructure. The three-part proposal (1) sets forth a definition of “independent control” in order to identify smart-contract based financial protocols that do not constitute DeFi; (2) seeks to classify genuine DeFi protocols — neutral, decentralized software — as “critical infrastructure,” subject to oversight and security coordination by the Treasury Department’s Office of Cybersecurity and Critical Infrastructure Protection (“OCCIP”); and (3) suggests that new laws could require certain businesses that are (a) necessary to the transmittal of communications about DeFi transactions, (b) transmit a material portion of such communications and (c) offer the service as a business to take on additional illicit finance risk management practices, without becoming “financial institutions” subject to the BSA. This paper is intended to begin a meaningful conversation about how to achieve the policy goals of combating illicit financial activities while allowing for continued innovation in DeFi, a nascent technological sector.