Blockchain Papers

Vicki Wei Tang, Qingquan Zhang

No abstract is available for this record.

Kristof Lommers, Jack Kim, Mohamed Baioumy

No abstract is available for this record.

Burda, Maxwell C, Maximilian P. M. P. Locca, Kalina Staykova

The Ethereum blockchain is hosting the next generation of financial services platforms, which require novel governance approaches to organize and engage platform participants. In this paper, we explore how the choice of decentralized finance (DeFi) platforms to distribute decision rights to their participants in the form of tokens impacts the roles of these participants before and after platform launch. Relying on insights from seven of the largest DeFi platforms and utilizing a grounded theory approach. we find that the roles of all platform participants significantly change post-launch. Users become platform owners, third-party complementors contribute more actively to the platform’s success, and the initial platform owners give up ownership in exchange for a healthier platform ecosystem and ideological fulfillment. Based on our analysis, we seek to extend our understanding of governance on blockchain-based platforms by emphasizing the changing roles of platform participants over time and the distribution of power from owners to users.

Farah Shishan, Hazar Hmoud, Hala Zaidan, Zainah Qasem

No abstract is available for this record.

Kevin Mei, Michael Sockin

We study a token-based platform where users choose between adopting the platform’s service and speculating on its native token. While both adopters and speculators earn the token’s capital gain, adopters also incur a participation cost to obtain a noisy service benefit enhanced by network effects. This tension between adoption and speculation can suppress participation, halt learning, and trigger collapse even when expected fundamentals are strong. We characterize the participation threshold, show how token-price volatility expands the collapse region, and identify the resulting learning traps. The model implies that inflation and adopter-targeted incentives support participation, whereas subsidies to speculators increase fragility.

Eric Budish

No abstract is available for this record.

Jun Aoyagi, Yuki Ito

No abstract is available for this record.

Henrik Axelsen, Johannes Rude Jensen, Omri Ross

The IS discourse on the potential of distributed ledger technology (DLT) in the financial services has grown at a tremendous pace in recent years. Yet, little has been said about the related implications for the costly and highly regulated process of compliance reporting. Working with a group of representatives from industry and regulatory authorities, we employ the design science research methodology (DSR) in the design, development, and evaluation of an artefact, enabling the automated collection and enrichment of transactional data. Our findings indicate that DLT may facilitate the automation of key compliance processes through the implementation of a "pull-model", in which regulators can access compliance data in near real-time to stage aggregate exposures at the supranational level. Generalizing our preliminary results, we present four propositions on the implications of DLT in compliance. The findings contribute new practical insights on the topic of compliance to the growing IS discourse on DLT.

Christos Makridis, Gordon Liao

There is a large body of empirical and theoretical literature on the effects of technological change on individuals, labor markets, and overall economic activity. Theories of skill-biased technical change (SBTC) suggest that technology increases the earnings power of skilled workers, but substitutes for less skilled workers. Distributed ledger technologies (DLTs) provide a new context for examining and understanding the impact of technology change on labor, competition, and economic outcomes. This paper explores the theoretical frameworks through which DLTs could enhance economic mobility and provides examples from several areas, including: i) the creation of new jobs and higher value-added jobs, and the modularization of complex tasks; ii) improvements in the way people learn and acquire human capital; iii) increased competition in the marketplace; and iv) more inclusive access to financial services with fewer intermediaries.

Christoph Müller-Bloch, Jonas Valbjørn Andersen, Jason Spasovski, Jungpil Hahn

Blockchain systems allow for securely keeping shared records of transactions in a decentralized way. This is enabled by algorithms called consensus mechanisms. Proof-of-work is the most prominent consensus mechanism, but environmentally unsustainable. Here, we focus on proof-of-stake, its best-known alternative. Importantly, decentralized decision-making power is not an inherent feature of blockchain systems, but a technological possibility. Numerous security incidents illustrate that decentralized control cannot be taken for granted. We therefore study how key parameters affect the degree of decentralization in proof-of-stake blockchain systems. Based on a real-world implementation of a proof-of-stake blockchain system, we conduct agent-based simulations to study how a range of parameters impact decentralization. The results suggest that high numbers of initial potential validator nodes, large transactions, a high number of transactions, and a very high or very low positive validator network growth rate increase decentralization. We find weak support for an impact of changes in transaction fees and initial stake distributions. Our study highlights how blockchain challenges our understanding of decentralization in information systems research, and contributes to understanding the governance mechanisms that lead to decentralization in proof-of-stake blockchain systems as well as to designing proof-of-stake blockchain systems that are prone to decentralization and therefore more secure.

Felician Alecu, Paul Pocatilu, Silviu Ojog, Petru Simon Mot

No abstract is available for this record.

Alessio Castello, Grégory Gadzinski

The benefits offered by cryptocurrencies are a great many: transaction cost and speed, security and transparency, to name a few. Yet, there is also a major drawback represented by their extremely high volatility. Stablecoins offer an ideal solution since they preserve all the advantages of blockchain-based currencies, while reducing considerably the volatility issue. Currently, stablecoins are almost exclusively pegged to the US Dollar and secured by non-crypto assets held in account at custodial institutions. In this article, we present the design of a decentralized organization aimed at issuing stablecoins backed by crypto-assets stored on-chain and pegged to assets different from fiat money. Our model offers several advantages, in particular, it allows the issuance of stablecoins in a trustless, permission-less and non-custodial environment.

Giovanni De Gasperis, Sante Dino Facchini, Alessio Susco

No abstract is available for this record.

María Cruz Valiente, David Rozas

No abstract is available for this record.

Michael Zargham, Kelsie Nabben

The concept of "Decentralized Autonomous Organization" has been popularized as part of the "Web 3.0" movement. This movement is characterized by digital infrastructures that are 'decentralized' in network architecture and permissionless to use. Decentralized autonomous organizations, referred to as DAOs, are a digital expression of the political will to self-organize. The granular entanglement of social and technical concepts makes it challenging to identify a historical precedent for DAOs. Yet, literature review and analysis reveals that this particular entanglement of information systems and self-organization is consistent with longstanding conceptual development and practice in the field of cybernetics. Drawing on Stafford Beer's Viable Systems Model, this piece bridges DAOs and cybernetics via two main principles of organization: viability and purpose. Viability is a property of a system such that it has sufficient adaptive capacity to thrive in the face of change; adaptive capacity is characterized according to Ross Ashby's concept of 'variety'. Purpose is the ability to define and collectively pursue a goal in the sense of feedback control systems. Building on the control theoretic concepts of observability, controllability, and reachability, we examine the 'governance surface' of an organization and the associated trade-offs between resilience and robustness that emerge in governance surface design. We propose that this trade-off can be addressed with a constitutional archetype whereby an organization's ability to update its code is constrained but not eliminated. A case study from a DAO known as '1Hive' is explored to demonstrate this archetype in action. We consider the limitations of the cybernetics perspective by emphasizing the subjectivity of the governance designer. Finally, we conclude with future research directions.

Benjamin M. Blau, Shardul Vikram

With blockchain technology as its foundation, the rise of Web3 and associated token economics promises unprecedented and fundamental changes in areas of ownership, governance, finance and engagement. The power of true ownership of digital assets, immutability and portability across worlds, platforms, and communities is changing how individuals and companies engage. Smart contracts enable new programmable commercial constructs which provide coded guarantees without the notion of a human guarantor. These powerful concepts of immutable record-keeping, true ownership, guaranteed transaction execution lay the foundation of the future of a Decentralized Customer Experience (DCX). This paradigm shift opens-up untapped opportunities and addressable markets in the CX space such as the empowerment of consumers in decentralized autonomous organizations, new business and commercial models, brand managemet & lifetime loyalty (aka. ‘super fan’), community-intrinsic marketing, and enablement & certification. This leads to industry-specific value cases and their monetization in healthcare, insurance, retail, consumer goods, and high-tech and the software industry. This article proposes the definition of a new market category called DCX unlocked by the impact of Web3 and blockchain technology onto the customer experience space and assesses new addressable markets spanning across almost any industry.

Evelyne Bischof, Alex Botezatu, Sergey Jakimov, Ilya Suharenko · 9 authors

Decentralized autonomous organizations (DAO) launched on a blockchain and governed by a smart contract promises to bring self-organization to a new technological level. Crisis management has no standard decentralized solution within DAO yet. A central authority is a natural component due to compliance reasons in certain domains, for example, special-purpose financing, in which the DAO governance model could be reasonably applied. More generally, a centralized DAO representative could streamline implementing DAO decisions that involve interactions with legacy systems. The article presents a perspective of modern technologies for organizing a foundation for special-purpose financing and considers longevity as a model example of the purpose.

Paul P. Momtaz

No abstract is available for this record.

Darcy W E Allen, Chris Berg, Aaron M. Lane

A cryptocurrency token airdrop is a novel means of distributing rights over a blockchain project to a community of users and owners for free. The market value of these airdrop giveaways is often upwards of hundreds of millions of dollars. This paper considers why projects might choose this unusual and costly means of token distribution. It considers a diverse selection of high-profile airdrops as case studies between 2014 and 2022. This is the first comprehensive analysis of the rationales and mechanisms of Web3 token airdrops. We find that two primary rationales for airdrops are marketing (to attract new users and to maintain a community) and decentralisation of ownership and control of a project (building community, providing regulatory protection, and enhancing security). Additional rationales include creating liquid public markets and taxation treatment of token distribution. The paper contributes to an understanding of business practice and strategy in the emerging cryptocurrency and blockchain industry.

Elie Kapengut, Bruce Mizrach

On September 15, 2022, the Ethereum network adopted a proof-of-stake (PoS) consensus mechanism. We study the impact on the network and competing platforms in a two month event window around the Beacon chain merge. We find that the transition to PoS has reduced energy consumption by 99.98%. Miners have not transformed into validators, and total block reward income (in USD) has fallen by 97%, though transaction fees (in ETH) for Ether have increased nearly 10%. The Herfindahl index for the top 10 is 1,009; the network is 19% less concentrated after the merge. Ethereum supply growth has been deflationary since the merge. The time between consecutive blocks is now steady at 12 seconds and transactions per day are up 7.0%. On Polygon, Matic fees rose but token fees fell. Polygon also slows, processing 3.3% fewer transactions per day. Solana's fees fall by $0.0003, and transactions per day are down 48%. Stablecoin transfer volumes fall on Ethereum and Polygon, but rise on Solana.

Fernando Álvarez, David Argente, Diana Van Patten

A currency's essential feature is to be a medium of exchange. We leverage a quasi-natural experiment-El Salvador as the rst country to make bitcoin legal tender-to study a cryptocurrency's potential to be used in daily transactions. The government also launched and provided incentives to download and use a digital wallet named Chivo, which shares features with Central Bank Digital Currencies (CBDCs) and allows users to trade bitcoin and dollars. Were Chivo Wallet and bitcoin actually adopted after this "big push"? Conducting a representative face-to-face survey and relying on blockchain data to obtain all Chivo transactions, we document how usage of digital payments and bitcoin is low, concentrated, and has been decreasing over time. We nd that privacy concerns are key barriers to adoption, which speaks to a policy debate on crypto and CBDCs that has had anonymity at its core. We also estimate the technology's adoption cost and its network externalities.

Efstathios Papanikolaou, Jannis Angelis, Vassilis Moustakis

No abstract is available for this record.

Eric R. Chen

As cryptocurrencies develop and circulate at greater rates, countries have appeared to consider the technology as an adoptable medium of exchange. By expanding the influence of cryptocurrencies through adoption, countries raise its impact on the global economy. This paper is the first to apply an augmented version of the gravity model to examine the effects of global cryptocurrency adoption on international trade. This empirical study involves aggregating datasets on U.S. bilateral trade flows, gravity variable statistics, and the adoption of cryptocurrencies. In application of the gravity model, regression analyses are used on the aggregated data to test the magnitude of cryptocurrencies’ impact on trade. Based on the overall findings, the variables for cryptocurrency adoption produce negative coefficients suggesting a negative correlation between the adoption of cryptocurrencies and international trade. The central tendency in the empirical evidence offers the interpretation that countries with weak institutions to promote trade are more likely to adopt cryptocurrencies resulting in a negative association between cryptocurrency adoption and trade.

Md Nazmul Islam, Sandip Kundu

With the continued scaling of transistor feature size, the cost of IC development has been escalating. The economics of semiconductor IC development favors high volume manufacturing, while high volume cannot be attained without developing an IC that serves many applications. Some of these applications are in low-margin Internet of Things (IoT) devices, where an SoC cannot command a high price. Consequently, without the ability to customize IC features after production, its lowest-priced application will determine an IC’s price. This motivates the manufacturers to develop chips with provisions for post-manufacturing IC customization. This paper explores how an IC can be programmed repeatedly and securely using blockchain-based smart contracts to allow users to upgrade orrentfeatures. The availability of such a system could, for example, allow a buyer to upgrade her processor from a low-end to a high-end part by making an additional payment to the manufacturer. Implementing such a system will require remote device management capabilities. Remote device management presents unique design considerations, such as, necessity for transparency of the actions that a device takes on behalf of a user; the requirement of a trusted arbiter; and provision for management of these devices beyond the intended lifespan. To overcome the challenges of transparency, longevity, and the necessity of a trusted arbiter, we propose embedded smart contracts in concert with a blockchain. Our proposed smart contract takes the device feature configuration request as input and outputs the corresponding configuration. To support remote, secure, and authorized updates, we propose an on-die hardware module which communicates with the smart contract and enforces its functionalities. This was prototyped using a programmable system-on-chip working in concert with Ethereum blockchain. The prototype demonstrates the feasibility and practicality of the proposed solution.