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Decentralized applications are often composed of multiple interconnected smart contracts. This is especially evident in DeFi, where protocols are heavily intertwined and rely on a variety of basic building blocks such as tokens,…
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…
Decentralized Finance (DeFi) lending enables permissionless borrowing via smart contracts. However, it faces challenges in optimizing interest rates, mitigating bad debt, and improving capital efficiency. Rule-based interest-rate models…
The current design space of derivatives in Decentralized Finance (DeFi) relies heavily on oracle systems. Replicating market makers (RMMs) provide a mechanism for converting specific payoff functions to an associated Constant Function…
Billions of dollars are lost every year in DeFi platforms by transactions exploiting business logic or accounting vulnerabilities. Existing defenses focus on static code analysis, public mempool screening, attacker contract detection, or…
Smart contracts power decentralized financial (DeFi) services but are vulnerable to security exploits that can lead to significant financial losses. Existing security measures often fail to adequately protect these contracts due to the…
Wholesale electricity market designs in practice do not provide the market participants with adequate mechanisms to hedge their financial risks. Demanders and suppliers will likely face even greater risks with the deepening penetration of…
This work explores the formation and propagation of systemic risks across traditional finance (TradFi) and decentralized finance (DeFi), offering a comparative framework that bridges these two increasingly interconnected ecosystems. We…
Decentralized finance revolutionizes traditional financial systems by leveraging blockchain technology to reduce trust. However, some vulnerabilities persist, notably front-running by malicious actors who exploit transaction information to…
Decentralized Finance (DeFi) platforms are often governed by Decentralized Autonomous Organizations (DAOs) which are implemented via governance protocols. Governance tokens are distributed to users of the platform, granting them voting…
Decentralized finance, powered by blockchain technology, is growing day by day. This field, which emerged a few years ago, today manages $70 billion in assets. In this study, the concept of decentralized finance is discussed and explained…
Decentralized finance, i.e., DeFi, has become the most popular type of application on many public blockchains (e.g., Ethereum) in recent years. Compared to the traditional finance, DeFi allows customers to flexibly participate in diverse…
Since the inception of permissionless blockchains with Bitcoin in 2008, it became apparent that their most well-suited use case is related to making the financial system and its advantages available to everyone seamlessly without depending…
Flash Loan attack can grab millions of dollars from decentralized vaults in one single transaction, drawing increasing attention from the Decentralized Finance (DeFi) players. It has also demonstrated an exciting opportunity that a huge…
Within just four years, the blockchain-based Decentralized Finance (DeFi) ecosystem has accumulated a peak total value locked (TVL) of more than 253 billion USD. This surge in DeFi's popularity has, unfortunately, been accompanied by many…
We coin the term *Protocols for Loanable Funds (PLFs)* to refer to protocols which establish distributed ledger-based markets for loanable funds. PLFs are emerging as one of the main applications within Decentralized Finance (DeFi), and use…
In this paper, we construct a decentralized clearing mechanism which endogenously and automatically provides a claims resolution procedure. This mechanism can be used to clear a network of obligations through blockchain. In particular, we…
We study the loan contracts offered by decentralised loan protocols (DLPs) through the lens of financial derivatives. DLPs, which effectively are clearinghouses, facilitate transactions between option buyers (i.e. borrowers) and option…
Blockchains offer strong security gurarantees, but cannot protect users against the ordering of transactions. Players such as miners, bots and validators can reorder various transactions and reap significant profits, called the Maximal…
Default risk calculus plays a crucial role in portfolio optimization when the risky asset is under threat of bankruptcy. However, traditional stochastic control techniques are not applicable in this scenario, and additional assumptions are…