Cryptocurrency / Digital Assets

MEV Capture and Decentralization in Execution Tickets ArXiv ID: 2408.11255 “View on arXiv” Authors: Unknown Abstract We provide an economic model of Execution Tickets and use it to study the ability of the Ethereum protocol to capture MEV from block construction. We demonstrate that Execution Tickets extract all MEV when all buyers are homogeneous, risk neutral and face no capital costs. We also show that MEV capture decreases with risk aversion and capital costs. Moreover, when buyers are heterogeneous, MEV capture can be especially low and a single dominant buyer can extract much of the MEV. This adverse effect can be partially mitigated by the presence of a Proposer Builder Separation (PBS) mechanism, which gives ET buyers access to a market of specialized builders, but in practice centralization vectors still persist. With PBS, ETs are concentrated among those with the highest ex-ante MEV extraction ability and lowest cost of capital. We show how it is possible that large investors that are not builders but have substantial advantage in capital cost can come to dominate the ET market. ...

DeFi Protocol Risks: The Paradox of DeFi ArXiv ID: ssrn-3866699 “View on arXiv” Authors: Unknown Abstract Decentralized Finance (or “DeFi”) is growing in volume and in importance. DeFi promises cheaper and more open access to financial services by reducing the costs Keywords: Decentralized Finance (DeFi), Blockchain, Smart Contracts, Cryptocurrency, Financial Innovation, Cryptocurrency / Digital Assets Complexity vs Empirical Score Math Complexity: 1.5/10 Empirical Rigor: 2.0/10 Quadrant: Philosophers Why: The paper is a conceptual review of DeFi risks and regulatory implications, relying on qualitative analysis of existing financial concepts rather than advanced mathematics or original backtesting/code implementations. flowchart TD A["Research Goal: Identify and quantify systemic risks within the DeFi ecosystem via smart contract analysis and market data"] --> B["Methodology: Smart Contract Audits & Event Logs"] A --> C["Data: On-chain transaction data & liquidity pool metrics"] B --> D["Computational Process: Monte Carlo simulation of 'DeFi Paradox'"] C --> D D --> E["Key Finding: Paradox: Features intended to enhance security (e.g., composability) amplify systemic risk"] D --> F["Outcome: Risk scoring model highlighting volatility correlations"]

The Markets in Crypto-Assets Regulation (MICA) and the EU DigitalFinanceStrategy ArXiv ID: ssrn-3725395 “View on arXiv” Authors: Unknown Abstract The European Commission published its new Digital Finance Strategy on 24 September 2020. One of the centrepieces of the Strategy is the draft Regulation on Mark Keywords: Digital Finance Strategy, EU Regulation, Crypto-Assets, Operational Resilience, European Commission, Cryptocurrency / Digital Assets Complexity vs Empirical Score Math Complexity: 0.5/10 Empirical Rigor: 0.0/10 Quadrant: Philosophers Why: This paper is a legal and policy analysis of EU regulation (MiCA), discussing regulatory frameworks, definitions, and supervisory cooperation without any mathematical modeling or empirical data. It focuses on regulatory challenges and proposed solutions in a theoretical, non-quantitative manner. flowchart TD A["Research Question"] --> B["Key Methodology"] B --> C["Data & Inputs"] C --> D["Computational Process"] D --> E["Key Findings/Outcomes"] A["Research Question<br/>How does MiCA align with<br/>EU Digital Finance Strategy?"] B["Methodology Steps<br/>- Policy analysis<br/>- Regulatory comparison<br/>- Impact assessment"] C["Data & Inputs<br/>- European Commission papers<br/>- MiCA draft texts<br/>- Academic literature"] D["Computational Process<br/>- Qualitative coding<br/>- Thematic analysis<br/>- Gap identification"] E["Key Findings<br/>1. MiCA is core to Digital Strategy<br/>2. Focus on operational resilience<br/>3. Defines crypto-asset categories<br/>4. Balances innovation vs protection"]