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As of August 2022, blockchain-based assets boast a combined market capitalisation exceeding one trillion USD, among which the most prominent are the decentralised autonomous organisation (DAO) tokens associated with decentralised finance…
Zcash is a fork of Bitcoin with optional anonymity features. While transparent transactions are fully linkable, shielded transactions use zero-knowledge proofs to obscure the parties and amounts of the transactions. First, we observe…
Decentralized exchanges (DEXs) provide a means for users to trade pairs of assets on-chain without the need for a trusted third party to effectuate a trade. Amongst these, constant function market maker DEXs such as Uniswap handle the most…
In this article, we consider the problem of a bank's loan portfolio in the context of liquidity risk, while allowing for the limited liability protection enjoyed by the bank. Accordingly, we construct a novel loan portfolio model with…
Traditional financial institutions face inefficiencies that can be addressed by distributed ledger technology. However, a primary barrier to adoption is the privacy concerns surrounding publicly available transaction data. Existing private…
Decentralized Finance (DeFi), a financial ecosystem without centralized controlling organization, has introduced a new paradigm for lending and borrowing. However, its capital efficiency remains constrained by the inability to effectively…
Options are fundamental to blockchain-based financial services, offering essential tools for risk management and price speculation, which enhance liquidity, flexibility, and market efficiency in decentralized finance (DeFi). Despite the…
I develop a tractable adverse-selection model comparing secured bank loans and bonds when both pledge collateral but differ in effective liquidation efficiency. A small wedge in recovery rates generates coexistence, a sharp bank-bond…
We consider a model of debt management, where a sovereign state trade some bonds to service the debt with a pool of risk-neutral competitive foreign investors. At each time, the government decides which fraction of the gross domestic…
Decentralized exchanges (DEXes) have introduced an innovative trading mechanism, where it is not necessary to match buy-orders and sell-orders to execute a trade. DEXes execute each trade individually, and the exchange rate is automatically…
The evolving landscape of Decentralized Finance (DeFi) has raised critical security concerns, especially pertaining to Protocols for Loanable Funds (PLFs) and their dependency on price oracles, which are susceptible to manipulation. The…
Global cryptocurrencies are unbacked and have high transaction cost incurred by global consensus. In contrast, grassroots cryptocurrencies are backed by the goods and services of their issuers -- any person, natural or legal -- and have no…
Third-party libraries like Log4j accelerate software application development but introduce substantial risk. Vulnerabilities in these libraries have led to Software Supply Chain (SSC) attacks that compromised resources within the host…
Verifiable delay functions have found a lot of applications in blockchain technology in recent times. Continuous verifiable delay functions are an improvement over the basic notion of VDFs with recursive capabilities. We are proposing the…
In recent years, electronic retail payment mechanisms, especially e-commerce and card payments at the point of sale, have increasingly replaced cash in many developed countries. As a result, societies are losing a critical public retail…
Increasing the transactional throughput of decentralized blockchains in a secure manner has been the holy grail of blockchain research for most of the past decade. This paper introduces a scheme for scaling blockchains while retaining…
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…
We provide a UTXO model of blockchain transactions that is able to represent both credit and debt on the same blockchain. Ordinarily, the UTXO model is solely used to represent credit and the representation of credit and debit together is…
Much of the recent excitement around decentralized finance (DeFi) comes from hopes that DeFi can be a secure, private, less centralized alternative to traditional finance systems. However, people moving to DeFi sites in hopes of improving…
The StableSims project set out to determine optimal parameters for the new auction mechanism, Liquidations 2.0, used by MakerDAO, a protocol built on Ethereum offering a decentralized, collateralized stablecoin called Dai. We developed an…