Meysam Alizadeh, Yasaman Asgari, Zeynab Samei, Sara Yari · 10 authors
Academics increasingly acknowledge the predictive power of social media for a wide variety of events and, more specifically, for financial markets. Anecdotal and empirical findings show that cryptocurrencies are among the financial assets that have been affected by news and influencers' activities on Twitter. However, the extent to which Twitter crypto influencer's posts about trading signals and their effect on market prices is mostly unexplored. In this paper, we use LLMs to uncover buy and not-buy signals from influencers and news outlets' Twitter posts and use a VAR analysis with Granger Causality tests and cross-correlation analysis to understand how these trading signals are temporally correlated with the top nine major cryptocurrencies' prices. Overall, the results show a mixed pattern across cryptocurrencies and temporal periods. However, we found that for the top three cryptocurrencies with the highest presence within news and influencer posts, their aggregated LLM-detected trading signal over the preceding 24 hours granger-causes fluctuations in their market prices, exhibiting a lag of at least 6 hours. In addition, the results reveal fundamental differences in how influencers and news outlets cover cryptocurrencies.
Quintino Francesco Lotito, Alberto Vendramini, Alberto Montresor, Federico Battiston
Many real-world complex systems are characterized by non-pairwise -- higher-order -- interactions among system's units, and can be effectively modeled as hypergraphs. Directed hypergraphs distinguish between source and target sets within each hyperedge, and allow to account for the directional flow of information between nodes. Here, we provide a framework to characterize the structural organization of directed higher-order networks at their microscale. First, we extract the fingerprint of a directed hypergraph, capturing the frequency of hyperedges with a certain source and target sizes, and use this information to compute differences in higher-order connectivity patterns among real-world systems. Then, we formulate reciprocity in hypergraphs, including exact, strong, and weak definitions, to measure to which extent hyperedges are reciprocated. Finally, we extend motif analysis to identify recurring interaction patterns and extract the building blocks of directed hypergraphs. We validate our framework on empirical datasets, including Bitcoin transactions, metabolic networks, and citation data, revealing structural principles behind the organization of real-world systems.
The Lightning Network is a peer-to-peer network designed to address Bitcoin's scalability challenges, facilitating rapid, cost-effective, and instantaneous transactions through bidirectional, blockchain-backed payment channels among network peers. Due to a source-based routing of payments, different pathfinding strategies are used in practice, trading off different objectives for each other such as payment reliability and routing fees. This paper explores differences within pathfinding strategies used by prominent Lightning Network node implementations, which include different underlying cost functions and different constraints, as well as different greedy algorithms of shortest path-type. Surprisingly, we observe that the pathfinding problems that most LN node implementations attempt to solve are NP-complete, and cannot be guaranteed to be optimally solved by the variants of Dijkstra's algorithm currently deployed in production. Through comparative analysis and simulations, we evaluate efficacy of different pathfinding strategies across metrics such as success rate, fees, path length, and timelock. Our experiments indicate that the strategies used by Eclair are advantageous in terms of payment reliability and result in paths with low fees. LND exhibits moderate success rates, while LDK results in paths with higher fee levels for smaller payment amounts; furthermore, CLN stands out for its minimal timelock paths. Additionally, we investigate the impact of Lightning node connectivity levels on routing efficiency. The findings of our analysis provide insights towards future improvements of pathfinding strategies and algorithms used within the Lightning Network.
Decentralized Finance (DeFi) has revolutionized lending by replacing intermediaries with algorithm-driven liquidity pools. However, existing platforms like Aave and Compound rely on static interest rate curves and collateral requirements that struggle to adapt to rapid market changes, leading to inefficiencies in utilization and increased risks of liquidations. In this work, we propose a dynamic model of the lending market based on evolving demand and supply curves, alongside an adaptive interest rate controller that responds in real-time to shifting market conditions. Using a Recursive Least Squares algorithm, our controller tracks the external market and achieves stable utilization, while also controlling default and liquidation risk. We provide theoretical guarantees on the interest rate convergence and utilization stability of our algorithm. We establish bounds on the system's vulnerability to adversarial manipulation compared to static curves, while quantifying the trade-off between adaptivity and adversarial robustness. We propose two complementary approaches to mitigating adversarial manipulation: an algorithmic method that detects extreme demand and supply fluctuations and a market-based strategy that enhances elasticity, potentially via interest rate derivative markets. Our dynamic curve demand/supply model demonstrates a low best-fit error on Aave data, while our interest rate controller significantly outperforms static curve protocols in maintaining optimal utilization and minimizing liquidations.
Tanusree Sharma, Yujin Potter, Kornrapat Pongmala, Henry Wang · 7 authors
Decentralized Autonomous Organizations (DAOs) resemble early online communities, particularly those centered around open-source projects, and present a potential empirical framework for complex social-computing systems by encoding governance rules within “smart contracts” on the blockchain. A key function of a DAO is collective decision-making, typically carried out through a series of proposals where members vote on organizational events using governance tokens, signifying relative influence within the DAO. In just a few years, the deployment of DAOs surged with a total treasury of $24.5 billion and 11.1M governance token holders collectively managing decisions across over 13,000 DAOs as of 2024 . In this study, we examine the operational dynamics of 100 DAOs, like pleasrdao, lexdao, lootdao, optimism collective, uniswap, etc. With large-scale empirical analysis of a diverse set of DAO categories and smart contracts and by leveraging on-chain (e.g., voting results) and off-chain data, we examine factors such as voting power, participation, and DAO characteristics dictating the level of decentralization, thus, the efficiency of management structures. As such, our study highlights that increased grassroots participation correlates with higher decentralization in a DAO, and lower variance in voting power within a DAO correlates with a higher level of decentralization, as consistently measured by Gini metrics. These insights closely align with key topics in political science, such as the allocation of power in decision-making and the effects of various governance models. We conclude by discussing the implications for researchers, and practitioners, emphasizing how these factors can inform the design of democratic governance systems in emerging applications that require active engagement from stakeholders in decision-making.
The proliferation of spam on the Web has necessitated the development of machine learning models to automate their detection. However, the dynamic nature of spam and the sophisticated evasion techniques employed by spammers often lead to low accuracy in these models. Traditional machine-learning approaches struggle to keep pace with spammers' constantly evolving tactics, resulting in a persistent challenge to maintain high detection rates. To address this, we propose blockchain-enabled incentivized crowdsourcing as a novel solution to enhance spam detection systems. We create an incentive mechanism for data collection and labeling by leveraging blockchain's decentralized and transparent framework. Contributors are rewarded for accurate labels and penalized for inaccuracies, ensuring high-quality data. A smart contract governs the submission and evaluation process, with participants staking cryptocurrency as collateral to guarantee integrity. Simulations show that incentivized crowdsourcing improves data quality, leading to more effective machine-learning models for spam detection. This approach offers a scalable and adaptable solution to the challenges of traditional methods.
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.
Yunjie Pan, Omkar Bhalerao, C. Seshadhri, Nishil Talati
Counting the number of small subgraphs, called motifs, is a fundamental problem in social network analysis and graph mining. Many real-world networks are directed and temporal, where edges have timestamps. Motif counting in directed, temporal graphs is especially challenging because there are a plethora of different kinds of patterns. Temporal motif counts reveal much richer information and there is a need for scalable algorithms for motif counting. A major challenge in counting is that there can be trillions of temporal motif matches even with a graph with only millions of vertices. Both the motifs and the input graphs can have multiple edges between two vertices, leading to a combinatorial explosion problem. Counting temporal motifs involving just four vertices is not feasible with current state-of-the-art algorithms. We design an algorithm, TEACUPS, that addresses this problem using a novel technique of temporal path sampling. We combine a path sampling method with carefully designed temporal data structures, to propose an efficient approximate algorithm for temporal motif counting. TEACUPS is an unbiased estimator with provable concentration behavior, which can be used to bound the estimation error. For a Bitcoin graph with hundreds of millions of edges, TEACUPS runs in less than 1 minute, while the exact counting algorithm takes more than a day. We empirically demonstrate the accuracy of TEACUPS on large datasets, showing an average of 30$\times$ speedup (up to 2000$\times$ speedup) compared to existing GPU-based exact counting methods while preserving high count estimation accuracy.
This study explores the conceptual development of a medical insurance catalogue voting system. The methodology is centred on creating a model where doctors would vote on treatment inclusions, aiming to demonstrate transparency and integrity. The results from Monte Carlo simulations suggest a robust consensus on the selection of medicines and treatments. Further theoretical investigations propose incorporating a patient outcome-based incentive mechanism. This conceptual approach could enhance decision-making in healthcare by aligning stakeholder interests with patient outcomes, aiming for an optimised, equitable insurance catalogue with potential blockchain-based smart-contracts to ensure transparency and integrity.
Although Telegram is currently one of the most popular instant messaging apps in the world, previous studies have mainly focused on analysing discussions on specific angles and topics. In this paper, we present a broad analysis of publicly accessible groups that cover a wide range of discussions, including Education, Erotic, Politics, and Cryptocurrencies. How do people interact with different topic groups? Is there any common or peculiar behaviour? We engineer and offer an open-source tool to automate the collection of messages from Telegram groups, a non-straightforward problem. We use it to collect more than 51 million messages from 669 groups. Here, we present a first-of-its-kind, per-topic analysis, contrasting the users' activity patterns from different angles -- the language, the presence of bots, the type and volume of shared media content, links to external platforms, etc. Our results confirm some anecdotal evidence, e.g., indications of spamming behaviour, and unveil some unexpected findings, e.g., the different sharing patterns of video and message length in groups of different topics. Our research provides a horizontal analysis of the public group in Telegram across various general topics, establishing a foundation for future studies that can delve deeper into user interactions and content dynamics within this unique messaging environment.
Research on Bitcoin (BTC) transactions is a matter of interest for both economic and network science fields. Although this cryptocurrency is based on a decentralized system, making transaction details freely accessible, making raw blockchain data analyzable is not straightforward due to the Bitcoin protocol specificity and data richness. To address the need for an accessible dataset, we present ORBITAAL, the first comprehensive dataset based on temporal graph formalism. The dataset covers all Bitcoin transactions from January 2009 to January 2021. ORBITAAL provides temporal graph representations of entity-entity transaction networks, snapshots and stream graph. Each transaction value is given in Bitcoin and US dollar regarding daily-based conversion rate. This dataset also provides details on entities such as their global BTC balance and associated public addresses.
Decentralized Finance (DeFi) is increasingly studied and adopted for its potential to provide accessible and transparent financial services. Analyzing how investors use DeFi is important for reaching a better understanding of their usage and for regulation purposes. However, analyzing DeFi transactions is challenging due to often incomplete or inaccurate labeled data. This paper presents a method to extract ego network motifs from the token transfer network, capturing the transfer of tokens between users and smart contracts. Our results demonstrate that smart contract methods performing specific DeFi operations can be efficiently identified by analyzing these motifs while providing insights into account activities.
Dimitar Kitanovski, Igor Mishkovski, Viktor Stojkoski, Miroslav Mirchev
Maintaining a balance between returns and volatility is a common strategy for portfolio diversification, whether investing in traditional equities or digital assets like cryptocurrencies. One approach for diversification is the application of community detection or clustering, using a network representing the relationships between assets. We examine two network representations, one based on a standard distance matrix based on correlation, and another based on mutual information. The Louvain and Affinity propagation algorithms were employed for finding the network communities (clusters) based on annual data. Furthermore, we examine building assets' co-occurrence networks, where communities are detected for each month throughout a whole year and then the links represent how often assets belong to the same community. Portfolios are then constructed by selecting several assets from each community based on local properties (degree centrality), global properties (closeness centrality), or explained variance (Principal component analysis), with three value ranges (max, med, min), calculated on a maximal spanning tree or a fully connected community sub-graph. We explored these various strategies on data from the S\&P 500 and the Top 203 cryptocurrencies with a market cap above 2M USD in the period from Jan 2019 to Sep 2022. Moreover, we study into more details the periods of the beginning of the COVID-19 outbreak and the start of the war in Ukraine. The results confirm some of the previous findings already known for traditional stock markets and provide some further insights, while they reveal an opposing trend in the crypto-assets market.
A fundamental goal of Web 3.0 is to establish a decentralized network and application ecosystem, thereby enabling users to retain control over their data while promoting value exchange. However, the recent Tron-Steem takeover incident poses a significant threat to this vision. In this paper, we present a thorough empirical analysis of the Tron-Steem takeover incident. By conducting a fine-grained reconstruction of the stake and election snapshots within the Steem blockchain, one of the most prominent social-oriented blockchains, we quantify the marked shifts in decentralization pre and post the takeover incident, highlighting the severe threat that blockchain network takeovers pose to the decentralization principle of Web 3.0. Moreover, by employing heuristic methods to identify anomalous voters and conducting clustering analyses on voter behaviors, we unveil the underlying mechanics of takeover strategies employed in the Tron-Steem incident and suggest potential mitigation strategies, which contribute to the enhanced resistance of Web 3.0 networks against similar threats in the future. We believe the insights gleaned from this research help illuminate the challenges imposed by blockchain network takeovers in the Web 3.0 era, suggest ways to foster the development of decentralized technologies and governance, as well as to enhance the protection of Web 3.0 user rights.
Hongzhou Chen, Xiaolin Duan, Abdulmotaleb El Saddik, Wei Cai
Harnessing the transparent blockchain user behavior data, we construct the Political Betting Leaning Score (PBLS) to measure political leanings based on betting within Web3 prediction markets. Focusing on Polymarket and starting from the 2024 U.S. Presidential Election, we synthesize behaviors over 15,000 addresses across 4,500 events and 8,500 markets, capturing the intensity and direction of their political leanings by the PBLS. We validate the PBLS through internal consistency checks and external comparisons. We uncover relationships between our PBLS and betting behaviors through over 800 features capturing various behavioral aspects. A case study of the 2022 U.S. Senate election further demonstrates the ability of our measurement while decoding the dynamic interaction between political and profitable motives. Our findings contribute to understanding decision-making in decentralized markets, enhancing the analysis of behaviors within Web3 prediction environments. The insights of this study reveal the potential of blockchain in enabling innovative, multidisciplinary studies and could inform the development of more effective online prediction markets, improve the accuracy of forecast, and help the design and optimization of platform mechanisms. The data and code for the paper are accessible at the following link: https://github.com/anonymous.
This paper examines the potential for Cyber-Physical Systems (CPS) to be governed in a decentralised manner, whereby blockchain-based infrastructure facilitates the communication between digital and physical domains through self-governing and self-organising principles. Decentralised governance paradigms that integrate computation in physical domains (such as 'Decentralised Autonomous Organisations' (DAOs)) represent a novel approach to autono-mous governance and operations. These have been described as akin to cybernetic systems. Through the lens of a case study of an autonomous cabin called "no1s1" which demonstrates self-ownership via blockchain-based control and feedback loops, this research explores the potential for blockchain infrastructure to be utilised in the management of physical systems. By highlighting the considerations and challenges of decentralised governance in managing autonomous physical spaces, the study reveals that autonomy in the governance of autonomous CPS is not merely a technological feat but also involves a complex mesh of functional and social dynamics. These findings underscore the importance of developing continuous feedback loops and adaptive governance frameworks within decentralised CPS to address both expected and emergent challenges. This investigation contributes to the fields of infra-structure studies and Cyber-Physical Systems engineering. It also contributes to the discourse on decentralised governance and autonomous management of physical spaces by offering both practical insights and providing a framework for future research.
Cheick Tidiane Bâ, Richard G. Clegg, Benjamin A. Steer, Matteo Zignani
In the dynamic landscape of the Web, we are witnessing the emergence of the Web3 paradigm, which dictates that platforms should rely on blockchain technology and cryptocurrencies to sustain themselves and their profitability. Cryptocurrencies are characterised by high market volatility and susceptibility to substantial crashes, issues that require temporal analysis methodologies able to tackle the high temporal resolution, heterogeneity and scale of blockchain data. While existing research attempts to analyse crash events, fundamental questions persist regarding the optimal time scale for analysis, differentiation between long-term and short-term trends, and the identification and characterisation of shock events within these decentralised systems. This paper addresses these issues by examining cryptocurrencies traded on the Ethereum blockchain, with a spotlight on the crash of the stablecoin TerraUSD and the currency LUNA designed to stabilise it. Utilising complex network analysis and a multi-layer temporal graph allows the study of the correlations between the layers representing the currencies and system evolution across diverse time scales. The investigation sheds light on the strong interconnections among stablecoins pre-crash and the significant post-crash transformations. We identify anomalous signals before, during, and after the collapse, emphasising their impact on graph structure metrics and user movement across layers. This paper pioneers temporal, cross-chain graph analysis to explore a cryptocurrency collapse. It emphasises the importance of temporal analysis for studies on web-derived data and how graph-based analysis can enhance traditional econometric results. Overall, this research carries implications beyond its field, for example for regulatory agencies aiming to safeguard users from shocks and monitor investment risks for citizens and clients.
We explore the burgeoning field of GameFi through a detailed network analysis of The Sandbox, a prominent decentralized application (dApp) in this domain. Utilizing the bow-tie model, we map out transaction data within The Sandbox, providing a novel perspective on its operational dynamics. Our study investigates the varying impacts of external support, uncovering a surprising absence of enduring effects on network activity. We also investigate the network's response to several notable incidents, including the Ronin Hack and the United States Securities and Exchange Commission's hearing on cryptocurrencies, revealing a generally resilient structure with limited long-term disturbances. A critical aspect of our analysis focuses on the "whales," or major stakeholders in The Sandbox, where we uncover their pivotal role in influencing network trends, noting a significant shift in their engagement over time. This research sheds light on the intricate workings of GameFi ecosystems and contributes to the broader discourse on the intersection of the Web, AI, and society, particularly in understanding the resilience and dynamics of emerging digital economies. We particularly note the parallels of the long-tail behavior we see in web-based ecosystems appearing in this niche domain of GameFi. Our findings hold significant implications for the future development of equitable and sustainable GameFi dApps, offering insights into stakeholder behavior and network resilience in the face of external challenges and opportunities.
The utilization of Large Language Models (LLMs) in financial trading has primarily been concentrated within the stock market, aiding in economic and financial decisions. Yet, the unique opportunities presented by the cryptocurrency market, noted for its on-chain data's transparency and the critical influence of off-chain signals like news, remain largely untapped by LLMs. This work aims to bridge the gap by developing an LLM-based trading agent, CryptoTrade, which uniquely combines the analysis of on-chain and off-chain data. This approach leverages the transparency and immutability of on-chain data, as well as the timeliness and influence of off-chain signals, providing a comprehensive overview of the cryptocurrency market. CryptoTrade incorporates a reflective mechanism specifically engineered to refine its daily trading decisions by analyzing the outcomes of prior trading decisions. This research makes two significant contributions. Firstly, it broadens the applicability of LLMs to the domain of cryptocurrency trading. Secondly, it establishes a benchmark for cryptocurrency trading strategies. Through extensive experiments, CryptoTrade has demonstrated superior performance in maximizing returns compared to traditional trading strategies and time-series baselines across various cryptocurrencies and market conditions. Our code and data are available at \url{https://anonymous.4open.science/r/CryptoTrade-Public-92FC/}.
This paper presents a case study of a cryptocurrency scam that utilized coordinated and inauthentic behavior on Twitter. In 2020, 143 accounts sold by an underground merchant were used to orchestrate a fake giveaway. Tweets pointing to a fake blog post lured victims into sending Uniswap tokens (UNI) to designated addresses on the Ethereum blockchain, with the false promise of receiving more tokens in return. Using one of the scammer's addresses and leveraging the transparency and immutability of the Ethereum blockchain, we traced the flow of stolen funds through various addresses, revealing the tactics adopted to obfuscate traceability. The final destination of the funds involved two deposit addresses. The first, managed by a well-known cryptocurrency exchange, was likely associated with the scammer's own account on that platform and saw deposits exceeding $3.5 million. The second address was linked to a popular cryptocurrency swap service. These findings highlight the critical need for more stringent measures to verify the source of funds and prevent illicit activities.
In digital forensics and various sectors like medicine and supply chain, blockchains play a crucial role in providing a secure and tamper-resistant system that meticulously records every detail, ensuring accountability. However, collaboration among different agencies, each with its own blockchains, creates challenges due to diverse protocols and a lack of interoperability, hindering seamless information sharing. Cross-chain technology has been introduced to address these challenges. Current research about blockchains in digital forensics, tends to focus on individual agencies, lacking a comprehensive approach to collaboration and the essential aspect of cross-chain functionality. This emphasizes the necessity for a framework capable of effectively addressing challenges in securely sharing case information, implementing access controls, and capturing provenance data across interconnected blockchains. Our solution, ForensiCross, is the first cross-chain solution specifically designed for digital forensics and provenance. It includes BridgeChain and features a unique communication protocol for cross-chain and multi-chain solutions. ForensiCross offers meticulous provenance capture and extraction methods, mathematical analysis to ensure reliability, scalability considerations for a distributed intermediary in collaborative blockchain contexts, and robust security measures against potential vulnerabilities and attacks. Analysis and evaluation results indicate that ForensiCross is secure and, despite a slight increase in communication time, outperforms in node count efficiency and has secure provenance extraction. As an all-encompassing solution, ForensiCross aims to simplify collaborative investigations by ensuring data integrity and traceability.
As the non-fungible token (NFT) market flourishes, price prediction emerges as a pivotal direction for investors gaining valuable insight to maximize returns. However, existing works suffer from a lack of practical definitions and standardized evaluations, limiting their practical application. Moreover, the influence of users' multi-behaviour transactions that are publicly accessible on NFT price is still not explored and exhibits challenges. In this paper, we address these gaps by presenting a practical and hierarchical problem definition. This approach unifies both collection-level and token-level task and evaluation methods, which cater to varied practical requirements of investors. To further understand the impact of user behaviours on the variation of NFT price, we propose a general wallet profiling framework and develop a COmmunity enhanced Multi-bEhavior Transaction graph model, named COMET. COMET profiles wallets with a comprehensive view and considers the impact of diverse relations and interactions within the NFT ecosystem on NFT price variations, thereby improving prediction performance. Extensive experiments conducted in our deployed system demonstrate the superiority of COMET, underscoring its potential in the insight toolkit for NFT investors.
Ethereum has become one of the primary global platforms for cryptocurrency, playing an important role in promoting the diversification of the financial ecosystem. However, the relative lag in regulation has led to a proliferation of malicious activities in Ethereum, posing a serious threat to fund security. Existing regulatory methods usually detect malicious accounts through feature engineering or large-scale transaction graph mining. However, due to the immense scale of transaction data and malicious attacks, these methods suffer from inefficiency and low robustness during data processing and anomaly detection. In this regard, we propose an Ethereum Transaction Graph Compression method named TGC4Eth, which assists malicious account detection by lightweighting both features and topology of the transaction graph. At the feature level, we select transaction features based on their low importance to improve the robustness of the subsequent detection models against feature evasion attacks; at the topology level, we employ focusing and coarsening processes to compress the structure of the transaction graph, thereby improving both data processing and inference efficiency of detection models. Extensive experiments demonstrate that TGC4Eth significantly improves the computational efficiency of existing detection models while preserving the connectivity of the transaction graph. Furthermore, TGC4Eth enables existing detection models to maintain stable performance and exhibit high robustness against feature evasion attacks.
Analyzing social media trends can create a win-win situation for both creators and consumers. Creators can receive fair compensation, while consumers gain access to engaging, relevant, and personalized content. This paper proposes a new model for analyzing Bitcoin trends on Twitter by incorporating a 'liquid democracy' approach based on user reputation. This system aims to identify the most impactful trends and their influence on Bitcoin prices and trading volume. It uses a Twitter sentiment analysis model based on a reputation rating system to determine the impact on Bitcoin price change and traded volume. In addition, the reputation model considers the users' higher-order friends on the social network (the initial Twitter input channels in our case study) to improve the accuracy and diversity of the reputation results. We analyze Bitcoin-related news on Twitter to understand how trends and user sentiment, measured through our Liquid Rank Reputation System, affect Bitcoin price fluctuations and trading activity within the studied time frame. This reputation model can also be used as an additional layer in other trend and sentiment analysis models. The paper proposes the implementation, challenges, and future scope of the liquid rank reputation model.