There have been various attempts at token standards on numerous blockchain platforms today to fundamentally change the way assets are traded in the traditional capital markets, but there is a lack of research and resolution on regulatory issues that become the common foundation for interoperability and reusable standards. Our proposal, Regulatory Compliance Protocol (RCP), is based on the regulations and reports of 15 global financial institutions and standardizes recommendations and guidelines involving the overall asset tokenization of TradFi and DeFi into five regulatory groups: Traceability, Privacy, Enforceability, Finality and Tokenizability, compiling them into 31 items and presenting a benchmark for technology and standards as an underlying protocol. To review the legality and effectiveness of RCP, it was validated based on three tokenization and trading scenarios, and by benchmarking existing asset-tokenization standards (ERC-20, ERC-7943, ERC-1400, and ERC-3643) against RCP, it makes explicit which regulatory requirements each standard addresses at the token level and which remain inherently off-chain.
Real-world asset (RWA) tokenization has emerged as a prominent application of blockchain technology, enabling off-chain financial and non-financial assets to be represented through blockchain-based instruments. However, deployed RWA systems remain difficult to compare because legal claims, custody arrangements, token mechanics, verification processes, and on-chain integrations are often described separately. This paper develops a systems-level taxonomy of RWA tokenization to classify how off-chain assets are legally, economically, and technically represented on-chain. Following an iterative taxonomy-development method, we organize twenty-three dimensions into five components: governance, asset structure, token properties, distributed ledger technology, and economy. We apply the taxonomy to twenty major RWA systems selected by market capitalization and compare their design choices across asset classes and implementation models. The classification shows that current RWA tokenization is predominantly implemented through hybrid architectures: blockchain tokens support representation, transfer control, redemption workflows, pricing, and composability, while core legal guarantees remain anchored in off-chain legal wrappers, custodial arrangements, compliance processes, and verification mechanisms. The analysis also reveals recurring documentation gaps concerning voting rights, dispute forums, burn mechanics, supply constraints, and reserve verification. Overall, the taxonomy provides a structured basis for comparing RWA systems, identifying design patterns and limitations, and supporting future research on blockchain-based financial infrastructure.
In traditional banking, repeated deposit-and-lend cycles let a single dollar of reserves support multiple dollars of claims. Decentralized finance produces an analogous structure with tokens. Constructing a Token Graph of 10,200 tokens across 200 blockchains, this paper maps the resulting hierarchy and shows that, by late 2025, each dollar of base assets supports $4.7 of total claims. An embedded yield correction disentangles two channels that raw data conflates: a compositional channel, where lending protocols concentrate in deeper tiers and mechanically raise average yields; and a liquidity channel, where each derivation step reduces secondary-market depth and depresses yields in liquidity-sensitive pools. The liquidity channel concentrates in DEX pools and vanishes in lending pools. A yield decomposition shows that the tier gradient operates entirely through fundamental protocol yields, not incentive-token emissions; quantile regressions reveal that the structural associations concentrate in the upper tail of the yield distribution, with near-zero effects at the median. These findings reframe DeFi's "double counting" as a structural risk question and identify liquidity fragmentation as the primary mechanism associated with yield variation across the token hierarchy.
Yuan Chang, Yinbin Miao, Tom H. Luan, Jinkai Zheng · 5 authors
The need for enhanced transaction privacy in decentralized finance (DeFi) is critical. However, existing coin mixing solutions often reveal telltale patterns on the blockchain, exposing users to heuristic analysis. This paper presents DeFiMix, an indistinguishable coin mixing scheme engineered to obscure transaction flows while guaranteeing fairness and security. DeFiMix achieves this through a dual-layer mechanism. First, an off-chain secret handshake protocol enables anonymous negotiation between senders and mixers, effectively breaking the link between transactions and participants. Second, on-chain transactions are structured using time-locks and concurrent signatures to resemble common DeFi activities such as staking and lending, rendering them indistinguishable from ordinary operations. Using security analysis and extensive simulations, we validate DeFiMix’s ability to prevent transaction linkage while remaining practically viable. The results underscore DeFiMix’s strong indistinguishability and fairness, alongside its minimal computational demands, establishing it as a compelling solution for privacy-focused transactions within the DeFi ecosystem.
Rarity is a key determinant of value in non-fungible token markets, yet its measurement remains fragmented, opaque, and theoretically underdeveloped. We analyse the statistical and combinatorial rarity metrics used by major platforms and show that most reduce to transformations of the Pythagorean means. The widely-used OpenRarity metric produces rankings identical to the geometric mean of attribute frequencies and is therefore not a new methodology. However, this approach admits a coherent probabilistic interpretation only under the assumption of trait independence. Alternative arithmetic- and harmonic-mean metrics lack theoretical justification, while the Jaccard distance is structurally biased when metadata omit missing traits. When metadata are standardised appropriately, Jaccard-based rankings are identical to the arithmetic mean ranks. These findings explain pervasive inconsistencies in rarity rankings and help explain the weak empirical relationship between price and rarity. We propose a standardised, theoretically grounded framework for rarity measurement that accommodates dependence structures and corrects metadata bias.
Decentralized Autonomous Organizations (DAOs) face a fundamental decentralization paradox: the characteristics that make them theoretically superior to existing hierarchical structures simultaneously undermine their practical effectiveness. This thesis investigates whether and how this paradox can be addressed through a multi-level analysis that encompasses price stability, market performance, and philanthropic implications. In doing so, this thesis aims to provide critical insights into DAOs, which are considered a new form of digital enterprise that facilitates collective action in managing digital commons. The thesis comprises three interconnected essays, each underpinned by a specific research question.<br><br>The first essay investigates how non-traditional performance indicators impact DAO volatility. Unlike some DAOs, which issue decentralized stablecoins to maintain stable token prices, most DAOs are built on a native token basis, whose value depends entirely on the effectiveness of governance and the protocolâs future adoption. This means their prices are more exposed to speculative trading, making volatility a central concern for these DAOs. Under these circumstances, native DAOs that are not built on a stable mechanism must rely on relevant performance indicators to assess token price stability from an investment perspective. However, non-traditional performance indicators, such as social media and wealth inequality, are not typically included when measuring the riskiness of crypto assets. Based on several econometric models and robustness checks (e.g., MM-type, GMM, and entropy balancing), the findings show that both social media dominance and wealth inequality significantly reduce DAO volatility. Drawing on herding behavior and equity theories, the concepts of digital elites and stability pacts demonstrate that strategic recentralization enhances price stability and enables the development of novel DAO risk assessment frameworks. This essay recognizes the relevance of social media dominance and wealth inequality as non-traditional performance indicators for predicting DAO volatility and can help establish a risk assessment framework that crypto investors can rely on when making informed decisions. <br><br>The second essay examines the impact of ownership concentration and duration on the performance of DAO markets. Using several econometric models and robustness checks (e.g., GLS, GMM, and PSM), the findings reveal a positive and significant impact of ownership concentration and duration across categories on DAO market performance. Furthermore, the findings indicate that the average ownership duration has a significant positive impact, whereas ownership concentration has a significant negative impact on DAO market performance. Drawing on participatory governance and social exchange theories, this essay proposes an optimal governance equilibrium model to enhance and sustain DAO market performance. Overall, this essay offers novel insights into how the token-holdersâ commitment mitigates decentralization's operational inefficiencies.<br><br>The third essay examines the application of DAOs in the charity sector and aims to deepen the understanding of crypto donors' perceptions of this technology. Improving transparency and trust in the charity sector is crucial, as donors increasingly seek new ways to monitor and verify their contributions. Specifically, this essay examines Maxity, the world's first Web3 Social Impact protocol that contributes to the 17 UN SDGs. By adopting a netnography approach and using UMAP, HDBSCAN, and BERTopic â three unsupervised machine learning models â this essay identified four latent dimensions related to DAO-based charitable activities. These findings reveal how donors perceive DAO as an effective channel for contributing to charitable causes, enabling greater transparency, faster donation delivery, cost-effectiveness, and increased trustworthiness. Furthermore, the concept of sociotechnical governance was introduced to theorize how DAO-enabled NFTs reshape institutional trust and refine traditional charity governance paradigms. This essay contributes to the expanding discussion on DAOs as an innovative channel for organizing and responding rapidly to humanitarian crises.
Decentralized Autonomous Organizations (DAOs) are transforming how collaboration, governance, and value coordination operate in digital societies. However, most DAOs remain technically and socially fragmented, limiting their evolution beyond isolated communities. This thesis introduces the concept of the Meta-Social Blockchain DAO, a socio-technical framework that reconceptualizes DAOs as interoperable governance ecosystems rather than standalone blockchain entities. Drawing upon computer science, sociology, and organizational theory, this research identifies three DAO formation modes: engineered DAOs, emergent tokenless DAOs, and meta-social DAOs enabling cross-community coordination. Together, these modes form an evolutionary continuum explaining how decentralized organizations evolve toward interoperable socio-technical ecosystems. The research integrates literature synthesis, empirical case studies, longitudinal community analysis, and infrastructure prototyping. Through investigations of engineered and tokenless DAO communities, including the AI Developer Community DAO, the study demonstrates decentralized coordination mechanisms beyond traditional cryptoeconomic incentives. The thesis further proposes a 5D Principle Model — Debug, Decentralized, De-confrontation, De-risking, and Distributed Open-Source — explaining how decentralized communities evolve from rule-based coordination toward self-organizing meta-social ecosystems. Based on these findings, a cross-community DAO infrastructure platform is designed to support governance interoperability, persistent identity, social interaction, and scalable collective intelligence. By bridging social theory and blockchain system design, this thesis advances a socio-technical theory of DAO evolution and contributes architectural principles for next-generation decentralized human–machine collaboration systems.
This paper investigates how blockchain consensus mechanisms and market mechanisms of liquidity provision affect price bubble formation in cryptocurrency markets. Specifically, we compare Proof-of-Work (PoW) and Proof-of-Stake (PoS) under two trading environments: a Limit Order Market (LOM) and an Automated Market Maker (AMM). We conduct a controlled laboratory experiment following a 2×2 between-subject design, generating four treatments: PoW-LOM, PoW-AMM, PoS-LOM, and PoS-AMM. Market outcomes are evaluated using standard bubble measures, including RD, RAD, RDMAX, AMPLITUDE, and CRASH. The results show that AMM-based markets exhibit weaker bubble dynamics than LOM-based markets, with lower mispricing, smaller peak overvaluation, and less severe crashes. By contrast, the results do not support the hypothesis that bubble formation is lower under PoS than under PoW. Instead, in the experimental setting, PoS treatments display stronger bubble patterns than PoW treatments. Overall, our results show that the institutional design of cryptocurrency markets plays an important role in shaping speculative price dynamics and market stability.
Blockchain oracles combine, within a single arrangement, activities that traditional finance assigns to distinct and in part regulated entities. We develop a four-stage oracle data lifecycle framework, covering sourcing, collection and reporting, aggregation, and delivery and consumption, and compare each stage with its counterpart in traditional wholesale data markets. In traditional markets, safeguards attach at the regulated start and end points of that lifecycle, and liability for mispricing rests on identifiable contractual parties. In DeFi, no regulated end-point exists: smart contracts execute on oracle prices automatically and irreversibly, and end-users bear mispricing risk without redress. Distinguishing control-based from supply-based regulatory hooks, we classify oracles as suppliers to DeFi arrangements. Because the risks accompanying the same activities differ, transplanting benchmark regulation would be disproportionate. We identify three paths forward: DeFi literacy, public-permissioned oracle networks, and regulated benchmark administrators publishing on-chain.
Decentralized finance (DeFi) promises cheaper, faster and more accessible financial services by replacing traditional regulated intermediaries with software protocols and smart contracts. But removing those intermediaries also removes the practical chokepoints for implementing modern financial regulation: customer identification and screening, disclosure, recordkeeping, operational safeguards and incident reporting. This paper argues that the core compliance challenge in DeFi is therefore a governance problem: regulators should focus less on DeFi’s underlying computer code and more on the control points where compliance duties could realistically be assigned, supervised and enforced. Identifying those control points could be challenging, however, because DeFi responsibilities are dispersed across software developers, governance structures, parties that interface with investors and third-party service providers. To address that challenge, the paper proposes a layered regulatory strategy comprising four complementary approaches: identifying and regulating gateway intermediaries that facilitate access to DeFi services; prescribing the compliance obligations those intermediaries should assume; establishing targeted governance standards for smart contracts and the oracle and data inputs on which they depend; and applying shadow-banking-type safeguards to constrain spillover channels between DeFi and the traditional financial system. No single approach would be sufficient on its own; their combined effect would reconstruct, at workable control points, the most critical accountability and oversight functions that DeFi displaces. Properly designed and implemented, this strategy could help to preserve DeFi’s efficiency benefits while cost-effectively restoring regulatory protection and accountability.
The intermediated holding of investment securities through tiered custody chains undermines the rights of investors. Distributed ledger technology offers potential solutions through direct investor-issuer connections, but emerging regulatory frameworks paradoxically recreate intermediation while providing weaker safeguards than for traditional securities. This article examines how current legal approaches to tokenised securities risk creating worse outcomes for investors, particularly retail participants.
The Decentralized Finance (DeFi) platforms are proving to be a calling card of the financial system in the global front. The de-Fi platforms provide peer-to-peer financial services without relying on any type of significant centralized intermediaries. This paper evaluates the success of DeFi platforms using a two-frame analysis, the Decentralized Infrastructure Sustainability and Security (DISS) Model, and the System Usability Scale (SUS). This study assesses the role of different elements of DISS and SUS models in affecting the use of DeFi platforms. Such findings in their turn assist us in comprehending the significance of encouraging mechanisms and data privacy in constructing and increasing the user trust and making the platform more successful.
Tobias Kranz, Vincent Schaaf, Tobias Guggenberger, Jens Strüker
Decentralized Finance (DeFi) promises to lay ground for a more open financial system enabled by blockchain technology. Therein, stablecoins have recently gained momentum as regulated and trusted payment instruments, increasingly adopted for cross-border transactions and supported by initiatives such as the GENIUS Act in the U.S. and the European MiCAR framework. While stablecoins create the foundation of trust for linking DeFi with traditional finance, the ecosystem still depends heavily on cryptocurrency markets due to limited real-world asset integration. Existing research largely focuses on traditional securities and tradable assets, but scant attention has been paid to one of the world’s largest asset classes, real estate. To address this gap, we propose a framework for the tokenization of real estate for integration into the DeFi ecosystem. Using the Design Science Research (DSR) approach, we construct and evaluate our framework through expert interviews and smart contract simulations. The simulations validate technical feasibility and demonstrate efficiency gains, with batch transfers reducing transaction costs for portfolio purchases. Building on these evaluations, we derive design principles for the nascent field of real-world asset tokenization. These principles highlight the importance of covering the entire product range, pursuing end-to-end compliance, leveraging token standards for interoperability, and extending their functionality for efficiency and scalability. By combining regulatory, organizational, and technical perspectives, our work advances design knowledge for compliant integration of real-world assets into DeFi.
Dec 23, 2025·Proceedings of the ... Annual Hawaii International Conference on System Sciences/Proceedings of the Annual Hawaii International Conference on System Sciences
Tejas Kotha, Kushagra Bhatnagar, Leona Chandra Kruse, Matti Rossi
NFTs (non-fungible tokens) promised the interaction of artists/creators directly with their collectors without the need for any intermediaries, but the realisation was quick that such a technology, instead of getting rid of intermediaries, reintroduced new intermediaries in the form of NFT marketplaces. These marketplaces exhibit diverse features and cater to different user groups. A wide array of governance strategies, such as curation and gatekeeping, are used to steer creativity and interactions in the marketplace, informed by the marketplace's strategy. We examined this diversity by identifying the 'ideal types' of marketplaces based on these strategies alongside the motivations of the creators to make sense of the growing NFT market and constructed a typology that distinguishes four kinds of NFT marketplaces: Avant-garde, Canonical, Mass Culture, and Coterie. The article also offers practical implications for creators and collectors looking to make informed choices when deciding to participate in a particular marketplace.
This paper examines the strategic behavior of rational actors in the TON blockchain, focusing on their responses to slashing mechanisms in a proof-of-stake (PoS) environment. Slashing introduces financial penalties for behavior that threatens network integrity, addressing the nothing-at-stake problem, where validators in PoS systems can support multiple chains at no cost. Although slashing is intended to deter malicious behavior by Byzantine actors, it also affects rational validators by altering their expected returns. Using a game-theoretic model inspired by the BAR framework, this study examines how rational, utility-maximizing validators weigh the risks and rewards of violating or enforcing slashing mechanisms in the presence of potentially Byzantine actors when penalty enforcement is uncertain. Located at the intersection of game theory and distributed systems, this research sheds light on compliance and deviation dynamics in PoS networks, contributing to a deeper understanding of incentive alignment in blockchain governance.
The thesis deals with the development of a decentralized Ethereum-based application for purchasing, selling and playing music. The goal of the application is to demonstrate the use of a blockchain-based platform that can replace corporate intermediaries.
One of the main Web3 applications is Non-Fungible Tokens, blockchain-based certificates to keep track of the ownership of unique digital or physical assets. Nowadays, there is no standard method to evaluate an NFT, and only for a trait-based collection can we rely on the rarity score, which estimates the scarcity of the traits of the NFT. However, rarity is unsuitable for describing the price of a token in a volatile market, and it is not a good price indicator because a token’s price is strictly related to external unpredictable events and the interest people have in specific assets. In this paper, we propose an evaluation model called The Popularity Model , that aims to evaluate NFTs based on marketability The Popularity Model is based on a set of indices which define a dynamic, socioeconomic indicator, with an antifraud system. We formalised and compared our popularity model and the rarity score to show their differences. Finally, we propose two applicable use cases in which the popularity index can be applied. The experiments show and confirm the utility and efficacy of the proposed evaluation model.
Decentralized Finance (DeFi) has become a key innovation within blockchain technology by enabling permissionless and programmable financial services without traditional intermediaries. This thesis examines how yield is generated in DeFi and provides a systematic comparison of the main implementation models that enable it. The study focuses on three core mechanisms—liquidity mining, interest-bearing token systems, and automated vault strategies—and explores how they operate in practice through case studies of Aave, Uniswap, and Yearn Finance. The research aims to classify these models, analyze their technical foundations, and evaluate their governance structures and associated risks. The analysis is based on a literature review and protocol documentation from leading DeFi platforms. Each model is assessed across several dimensions, including reward structure, capital efficiency, user accessibility, and exposure to risks such as smart contract exploits, impermanent loss, and market volatility. The case studies demonstrate how different design choices lead to variations in yield generation: Aave emphasizes lending-based interest mechanisms, Uniswap relies on trading fees, and Yearn Finance automates strategy allocation across protocols. The findings show that no single model is universally superior; instead, each involves trade-offs between sustainability, complexity, and yield potential. Governance also emerges as a central factor in long-term stability, as the governance mechanisms influence strategy design, risk management, and protocol evolution. Overall, the study highlights a shift in DeFi from rapid growth toward more sustainable and structured yield frameworks.
The user-ownership model of Web3 commerce is widely viewed as a potential paradigm shift for the digital economy, yet its macroeconomic implications remain under-quantified within a unified, dynamic, and parameterized framework. This paper develops a tractable dynamic macroeconomic model of a “wealth flywheel” featuring two feedback channels. The income loop operates through profit-backed user rebates that raise income-equivalent purchasing capacity and stimulate consumption. The asset loop operates through consumption-driven profit and valuation growth, which expands household wealth under user ownership and feeds back into consumption via wealth effects. In a static setting, the paper derives a closed-form consumption multiplier and a corresponding stability condition. Aggregate consumption responds proportionally to an exogenous income impulse, and the system is stable if the combined strength of rebate-induced consumption feedback and wealth-effect amplification remains below unity. The static mechanism is then embedded into a global multi-period simulation framework with time-varying Web3 penetration, finite-horizon household deposit reallocation into consumption, and endogenous valuation paths. Using illustrative parameterizations, the paper simulates trajectories for global real GDP, equity market capitalization, household wealth, and inflation under neutral and aggressive adoption scenarios. The analysis further examines distributional implications when capitalization gains are directed toward user cohorts with higher marginal propensities to consume. The framework provides a parsimonious diagnostic for stability in mechanism design and contributes to macro-prudential discussions of self-reinforcing growth dynamics. Importantly, the analysis abstracts from collateralized borrowing, leverage, rehypothecation, and other financial intermediation channels. All amplification effects in the model arise from ownership structure and wealth effects rather than from credit-driven financial accelerators.
Decentralized Finance (DeFi) is not merely a new competing technology as it challenges the core principle of traditional banking by eliminating the bank's role as an intermediary in financial services. This thesis establishes a foundation by examining DeFi technology and analyzing the specific areas of banking where its disruptive impact is most significant. Through a literature review and case examples, the study examines the strategic responses traditional banks have developed to address the disruption caused by DeFi technology. The research indicates that the threat of banks being displaced is unfounded; rather, the most likely scenario is strategic adaptation. Banks have responded to the DeFi challenge in various ways, including developing their own private blockchain-based platforms and tokenizing assets (Real-World Asset tokenization). Meanwhile, central banks have begun researching and developing the launch of Central Bank Digital Currencies (CBDCs). Additionally, regulatory authorities have responded to DeFi disruption by tightening the associated regulatory environment. The thesis concludes that banks are not competing directly with open DeFi; instead, they are integrating its technological benefits, such as automation and efficiency, into their regulated operations. The future financial system appears as a model of coexistence that combines the technological innovation of DeFi with the institutional trust of banks.
Ankenbrand, Thomas, Bieri, Denis, Ferrazzini, Stefano, Hoehener, Johannes
Tokenised money encompasses a broad range of digital monetary instruments issued on distributed ledger technology, including Central Bank Digital Currencys (CBDCs), deposit tokens, stablecoins, and decentralised protocol-based designs. Despite their shared monetary function, these instruments differ markedly in issuer structure, collateralisation, stability mechanisms, governance, and technological embedding, creating conceptual ambiguity. This paper proposes a concise taxonomy spanning twelve key design dimensions, offering a systematic framework for comparing heterogeneous forms of tokenised money. The taxonomy clarifies how different design choices shape monetary properties, risks, and policy implications, supporting clearer analysis and dialogue across academia, industry, and regulation.
Despite the recognition of Blockchain Technology’s disruptive potential, there is ongoing debate about its ontological and axiomatic foundations. This study develops a theoretical framework to explain the underline structural principles of blockchain technology through the lens of Arthur’s theory of technology, and the framework is developed through adopting Narrative Literature Review. By integrating conceptual analysis with a structural examination of Ethereum, this study reveals that blockchain technology is not a single invention but a composite technological system developed through recursive interactions among sub-technologies. The proposed framework identifies three interrelated structural patterns—the Combinatorial Pattern of Components elucidating blockchain technology’s structural ontology, the Capturing Pattern of Algorithms revealing the operational source of its innovation, and the Recursive Pattern of Technologies characterizing its inner logical structure of components—that together explain blockchain technology’s generative and evolving nature. The study extends Arthur’s theory by clarifying the “technology within technology” dynamic that underlies blockchain technology innovation. The Ethereum case confirms the framework’s applicability and generalizability, showing that blockchain systems, despite their diversity, share a consistent structural logic. Beyond its theoretical contribution, the framework offers practical guidance for sustainable technological innovation. It provides analytical support for designing blockchain-based applications’ architectures that enhance transparency, efficiency, and adaptability, contributing to the sustainable evolution of digital technologies.