Crypto / Digital Assets

Decentralized Finance: Protocols, Risks, and Governance ArXiv ID: 2312.01018 “View on arXiv” Authors: Unknown Abstract Financial markets are undergoing an unprecedented transformation. Technological advances have brought major improvements to the operations of financial services. While these advances promote improved accessibility and convenience, traditional finance shortcomings like lack of transparency and moral hazard frictions continue to plague centralized platforms, imposing societal costs. In this paper, we argue how these shortcomings and frictions are being mitigated by the decentralized finance (DeFi) ecosystem. We delve into the workings of smart contracts, the backbone of DeFi transactions, with an emphasis on those underpinning token exchange and lending services. We highlight the pros and cons of the novel form of decentralized governance introduced via the ownership of governance tokens. Despite its potential, the current DeFi infrastructure introduces operational risks to users, which we segment into five primary categories: consensus mechanisms, protocol, oracle, frontrunning, and systemic risks. We conclude by emphasizing the need for future research to focus on the scalability of existing blockchains, the improved design and interoperability of DeFi protocols, and the rigorous auditing of smart contracts. ...

DecentralizedFinance(DeFi) ArXiv ID: ssrn-3539194 “View on arXiv” Authors: Unknown Abstract DeFi (‘decentralized finance’) has joined FinTech (‘financial technology’), RegTech (‘regulatory technology’), cryptocurrencies, and digital assets as one of th Keywords: Decentralized Finance (DeFi), Fintech, Cryptocurrency, Blockchain, Digital Assets, Crypto / Digital Assets Complexity vs Empirical Score Math Complexity: 1.0/10 Empirical Rigor: 1.0/10 Quadrant: Philosophers Why: The paper is a legal and policy analysis discussing the regulatory implications of decentralized finance, with no mathematical formulas, code, or empirical backtesting presented in the excerpt. flowchart TD A["Research Goal: Impact of DeFi<br>on Traditional Finance"] --> B["Key Methodology: Literature Review &<br>Blockchain Data Analysis"] B --> C{"Data/Inputs"} C --> D["Smart Contract Logs<br>& Transaction Data"] C --> E["Academic Papers &<br>Market Reports"] D & E --> F["Computational Processes"] F --> G["Statistical Analysis of<br>Yield Rates & Liquidity"] F --> H["NLP for Sentiment<br>& Risk Assessment"] G & H --> I["Key Findings: High Returns,<br>Systemic Risks, &<br>Regulatory Challenges"]