In the energy transition, there is an urgent need for decreasing overall carbon emissions. Against this background, the purposeful and verifiable tracing of emissions in the energy system is a crucial key element for promoting the deep decarbonization towards a net zero emission economy with a market-based approach. Such an effective tracing system requires end-to-end information flows that link carbon sources and sinks while keeping end consumers’ and businesses’ sensitive data confidential. In this paper, we illustrate how non-fungible tokens with fractional ownership can help to enable such a system, and how zero-knowledge proofs can address the related privacy issues associated with the fine-granular recording of stakeholders’ emission data. Thus, we contribute to designing a carbon emission tracing system that satisfies verifiability, distinguishability, fractional ownership, and privacy requirements. We implement a proof-of-concept for our approach and discuss its advantages compared to alternative centralized or decentralized architectures that have been proposed in the past. Based on a technical, data privacy, and economic analysis, we conclude that our approach is a more suitable technical backbone for end-to-end digital carbon emission tracing than previously suggested solutions.
While decentralized finance (DeFi) has the potential to emulate and, indeed, outperform existing financial systems, it remains a complex phenomenon yet to be extensively researched. To make the most of this potential, its practitioners must gain a rigorous understanding of its intricacies, as must information systems (IS) researchers. Against this background, this study uses a multivocal literature review to capture the state of research in DeFi. Thereby, we (1) present a consolidating definition of DeFi as we (2) analyze, synthesize, and discuss the current state of knowledge in the field of DeFi. We do so while adapting the blockchain research framework proposed by (Risius and Spohrer, Business & Information Systems Engineering 59:385–409, 2017). Furthermore, we (3) identify gaps in the literature and indicate future research directions in DeFi. Even though our findings highlight several shortcomings in DeFi that have prevented its widespread adoption, our literature review shows a large consensus on DeFi’s many promising features and potential to complement the traditional financial system. To that end, this paper is presented to encourage further research to mitigate the current risks of DeFi, the payoff of which will be an enriched financial ecosystem.
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