SoK: Demystifying Stablecoins

Clark, Jeremy; Demirag, Didem; Moosavi, Mahsa

doi:10.2139/ssrn.3466371

Cited by 9 publications

(8 citation statements)

References 8 publications

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“…DeFi refers to "an ecosystem comprised of applications built on top of public distributed ledgers, for the facilitation of permissionless financial services" (Sandner, 2019). This represents the next stage in blockchain-driven financial services and has created new products, such as stablecoins, which aim to reduce the volatility of cryptoassets by pegging them to some more "stable" currencies such as the US dollar, the euro, or gold (Clark, Demirag, and Moosavi, 2019), or to flash loans, which are marketed as zero risk loans (Levine and Biggs, 2020). DeFi leverages the potential of AP Vol.…”

Section: Smart Contractsmentioning

confidence: 99%

“…DeFi refers to “an ecosystem comprised of applications built on top of public distributed ledgers, for the facilitation of permissionless financial services” (Sandner, 2019). This represents the next stage in blockchain‐driven financial services and has created new products, such as stablecoins, which aim to reduce the volatility of cryptoassets by pegging them to some more “stable” currencies such as the US dollar, the euro, or gold (Clark, Demirag, and Moosavi, 2019), or to flash loans, which are marketed as zero risk loans (Levine and Biggs, 2020). DeFi leverages the potential of smart contracts to create next‐generation financial assets on a blockchain, opening up the opportunity to “create an alternative financial system that can be more decentralized, innovative, interoperable, borderless, and transparent.” Although numerous challenges still need to be addressed, “decentralized business models have the potential to reshape existing industries and create a new landscape for entrepreneurship and innovation” (Chen and Bellavitis, 2020: 7).…”

Section: Introduction To Blockchain Architecturementioning

confidence: 99%

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Blockchain in Accounting Research and Practice: Current Trends and Future Opportunities*

Pimentel

Boulianne

2020

Accounting Perspectives

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This article provides a review of the accounting blockchain literature, with a focus on current trends and recommendations for future research opportunities. Our review identifies seven main areas: (i) future of blockchain technology, (ii) impact on the accounting function, (iii) auditing considerations, (iv) financial reporting for cryptoassets, (v) case studies, (vi) governance, and (vii) taxation. The article aims to bridge the gap between practitioners and academics by providing a review of both areas of literature and highlighting common ground between the two arenas. While academics have begun to explore how the accounting profession might change in response to blockchain, this research is limited primarily to the auditing field. Practitioners, for their part, have expanded their scope to also devote significant attention to the financial reporting and taxation of cryptoassets. Expanding the discussion of accounting and blockchains beyond their current concentrations in auditing and accounting information systems, we call for more research on the impact of blockchain technology in other areas such as corporate governance or the intersection of accounting and society.

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Section: Smart Contractsmentioning

confidence: 99%

Section: Introduction To Blockchain Architecturementioning

confidence: 99%

Blockchain in Accounting Research and Practice: Current Trends and Future Opportunities*

Pimentel

Boulianne

2020

Accounting Perspectives

View full text Add to dashboard Cite

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“…(5) The malicious contract pays the 10, 000 ETH Flash Loan back to dYdX . Until now, the attacker profits around 71 ETH, and if he repays the 112 WBTC loan to Compound with average market price 12 at that time, he will gain another roughly 1, 200 ETH 13 . Obviously, without ThunderStorm, it is not easy to recover the whole process of such a complicated hack.…”

Section: Speculative Usage Of Flash Loan In the Real Worldmentioning

confidence: 99%

“…Defi Monetary. Clark et al [13] give a survey about 'stablecoin' of DeFi protocols and comparison among a list of cryptocurrencies like Bitcoin, Ether and etc. Furthermore, Pernice et al [43] present a comprehensive taxonomy of cryptocurrency stabilization through combining their findings and studying classical monetary policy.…”

Section: Related Workmentioning

confidence: 99%

Towards A First Step to Understand Flash Loan and Its Applications in DeFi Ecosystem

Wang

Lin

et al. 2021

Proceedings of the Ninth International Workshop on Security in Blockchain and Cloud Computing

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Flash Loan, as an emerging service in the decentralized finance ecosystem, allows traders to request a non-collateral loan as long as the debt is repaid within the transaction. While providing convenience, it brings considerable challenges that Flash Loan allows speculative traders to leverage vulnerability of deployed protocols with vast capital and few risks and responsibilities. Most recently, attackers have gained over $15𝑀 profits from Eminence Finance [53] via exploiting Flash Loans to repeatedly swap tokens (i.e., EMN and DAI).To be aware of foxy actions, we should understand what is the behavior running with the Flash Loan by traders. In this work, we propose ThunderStorm, a 3-phase transaction-based analysis framework, to systematically study Flash Loan on the Ethereum. Specifically, ThunderStorm first identifies Flash Loan transactions by applying observed transaction patterns, and then understands the semantics of the transactions based on primitive behaviors, and finally recovers the intentions of transactions according to advanced behaviors. To perform the evaluation, we apply ThunderStorm to existing transactions and investigate 11 well-known platforms. As the result,22, 244 transactions are determined to launch Flash Loan(s), and those Flash Loan transactions are further classified into 7 categories. Lastly, the measurement of financial behaviors based on Flash Loans is present to help further understand and explore the speculative usage of Flash Loan. The evaluation results demonstrate the capability of the proposed system.

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“…Sams further designed seigniorage shares to include an elastic supply rule which adjusts the quantity of coins adaptively [23]. On the other hand, design review of stablecoins were al discussed in several research papers and industry reports [12,18,17,20,9,13,15]. Classification of stablecoins were introduced according to different types of collateral and intervention with pros and cons explained.…”

Section: Related Workmentioning

confidence: 99%

Understand Volatility of Algorithmic Stablecoin: Modeling, Verification and Empirical Analysis

Zhao¹,

Li²,

Yuan³

2021

Preprint

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An algorithmic stablecoin is a type of cryptocurrency managed by algorithms (i.e., smart contracts) to dynamically minimize the volatility of its price relative to a specific form of asset, e.g., US dollar. As algorithmic stablecoins have been growing rapidly in recent years, they become much more volatile than expected. In this paper, we took a deep dive into the core of algorithmic stablecoins and shared our answer to two fundamental research questions, i.e., Are algorithmic stablecoins volatile by design? Are they volatile in practice? Specifically, we introduced an in-depth study on three popular types of algorithmic stablecoins and developed a modeling framework to formalize their key design protocols. Through formal verification, the framework can identify critical conditions under which stablecoins might become volatile. Furthermore, we performed a systematic empirical analysis on real transaction activities of the Basis Cash stablecoin to relate theoretical possibilities to market observations. Lastly, we highlighted key design decisions for future development of algorithmic stablecoins.

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SoK: Demystifying Stablecoins

Cited by 9 publications

References 8 publications

Blockchain in Accounting Research and Practice: Current Trends and Future Opportunities*

Blockchain in Accounting Research and Practice: Current Trends and Future Opportunities*

Towards A First Step to Understand Flash Loan and Its Applications in DeFi Ecosystem

Understand Volatility of Algorithmic Stablecoin: Modeling, Verification and Empirical Analysis

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