Related papers: On-Chain Credit Risk Score in Decentralized Financ…
Financial speculators often seek to increase their potential gains with leverage. Debt is a popular form of leverage, and with over 39.88B USD of total value locked (TVL), the Decentralized Finance (DeFi) lending markets are thriving.…
Machine learning plays an essential role in preventing financial losses in the banking industry. Perhaps the most pertinent prediction task that can result in billions of dollars in losses each year is the assessment of credit risk (i.e.,…
Yield farming represents an immensely popular asset management activity in decentralized finance (DeFi). It involves supplying, borrowing, or staking crypto assets to earn an income in forms of transaction fees, interest, or participation…
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…
Fraud across the decentralized finance (DeFi) ecosystem is growing, with victims losing billions to DeFi scams every year. However, there is a disconnect between the reported value of these scams and associated legal prosecutions. We use…
This paper delves into the spectrum of credit risks associated with decentralized stablecoin issuance, ranging from overcollateralized lending to business-to-business credit. It examines the mechanisms, risks, and mitigation strategies at…
The risk of a credit portfolio depends crucially on correlations between the probability of default (PD) in different economic sectors. Often, PD correlations have to be estimated from relatively short time series of default rates, and the…
How will Decentralized Finance transform financial services? Using New Institutional Economics and Dynamic Capabilities Theory, I analyse survey data from 109 experts using non-parametric methods. Experts span traditional finance, DeFi…
Microfinance, despite its significant potential for poverty reduction, is facing sustainability hardships due to high default rates. Although many methods in regular finance can estimate credit scores and default probabilities, these…
Decentralized Finance (DeFi) staking is one of the most prominent applications within the DeFi ecosystem, where DeFi projects enable users to stake tokens on the platform and reward participants with additional tokens. However, logical…
In this research, we introduce a robust metric to identify Systemically Important Financial Institution (SIFI) in a financial network by taking into account both common idiosyncratic shocks and contagion through counterparty exposures. We…
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…
The Decentralized Finance (DeFi) ecosystem has experienced over \$10 billion in direct losses due to crime events. Beyond these immediate losses, such events often trigger broader market reactions, including price declines, trading activity…
Credit risk scoring must support high-stakes lending decisions where data distributions change over time, probability estimates must be reliable, and group-level fairness is required. While modern machine learning models improve default…
Decentralized Finance (DeFi), in which digital assets are exchanged without trusted intermediaries, has grown rapidly in value in recent years. The global DeFi ecosystem is fragmented into multiple blockchains, fueling the demand for…
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 trustless nature of permissionless blockchains renders overcollateralization a key safety component relied upon by decentralized finance (DeFi) protocols. Nonetheless, factors such as price volatility may undermine this mechanism. In…
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…
Evaluation of systemic risk in networks of financial institutions in general requires information of inter-institution financial exposures. In the framework of Debt Rank algorithm, we introduce an approximate method of systemic risk…
In recent days, the proliferation of several existing and new cyber-attacks pose an axiomatic threat to the stability of financial services. It is hard to predict the nature of attacks that can trigger a serious financial crisis. The…