What’s holding back blockchain finance? On the possibility of decentralized autonomous finance

Harwick, Cameron; Caton, James

doi:10.1016/j.qref.2020.09.006

Cited by 24 publications

(8 citation statements)

References 15 publications

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“…Users can lend their assets to the LPs, and receive an LP token which serves as a sort of receipt of their lending. The LP tokens can then be transferred, and their exchange negotiated like any other token allowing for a sort of crypto securitization of the loan [67]. However, if the token is lost or stolen, the amount lent will also be forfeited.…”

Section: Lending Poolsmentioning

confidence: 99%

The Blockchain Oracle Problem in Decentralized Finance—A Multivocal Approach

Caldarelli

Ellul

2021

Applied Sciences

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Decentralized Finance (DeFi) takes the promise of blockchain a step further and aims to transform traditional financial products into trustless and transparent protocols that run without involving intermediaries. Similar to how 2017 was the year of ICOs, 2020 was the year of DeFi, with more than fifteen billion dollars of total investments. The decentralized platforms utilize oracles to retrieve asset data from the external world, but their choice and management criteria are often unknown to the end-users. If oracles are poorly selected or managed, the funds of a rising number of investors are inevitably in danger. The issue, known as “the oracle problem”, which makes real-world applications controversial and debated due to the loss of decentralization, had recently drawn attention to DeFi, given the crescent number of related hacks that caused the loss of millions of dollars held in DeFi projects. Through a multivocal approach that considers academic papers, whitepapers, preprints, and opinion posts, this study aims to shed light on the pattern that identifies the oracle problem in DeFi and outline the most promising ways to overcome the related weaknesses. This research supports the view that the oracle problem in decentralized finance bears specific characteristics which require standardization and appropriate economic incentives to be addressed.

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Section: Lending Poolsmentioning

confidence: 99%

The Blockchain Oracle Problem in Decentralized Finance—A Multivocal Approach

Caldarelli

Ellul

2021

Applied Sciences

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show abstract

“…Users can lend their assets to the LPs, and receive an LP token which serves as a sort of receipt of their lending. The LP tokens can then be transferred, and their exchange negotiated like any other token allowing for a sort of crypto securitization of the loan [72]. However, if the token is lost or stolen, the amount lent will also be forfeited.…”

Section: Lending Poolsmentioning

confidence: 99%

The Blockchain Oracle Problem in Decentralized Finance - A Multivocal Approach

Caldarelli¹,

Ellul²

2021

Preprint

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Decentralized Finance (DeFi) takes the promise of blockchain a step further and aims to transform traditional financial products into trustless and transparent protocols that run without involving intermediaries. Similar to how 2017 was the year of ICOs, 2020 was the year of DeFI with more than $15 billion of total investments. The decentralized platforms utilize oracles to retrieve asset data from the external world, but their choice and management criteria are often unknown to the end-users. If oracles are poorly selected or managed, the funds of a rising number of investors are inevitably in danger. The issue known as “the oracle problem,” which makes real-world applications controversial and debated due to the loss of decentralization, had recently drawn attention to DeFi given the crescent number of related hacks that caused the loss of millions of dollars held in DeFi projects. With a multivocal approach, this paper aims to shed light on the pattern that identifies the oracle problem in DeFi and outline the most promising ways to overcome the related weaknesses. This research supports the view that the oracle problem in decentralized finance bears specific characteristics which require standardization and appropriate economic incentives to be addressed.

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“…(Johnson, 2020). The former is necessary for cryptocurrencies to serve as a stable store of value and to have a simple interface to the established financial system (Harwick and Caton, 2020). (Popescu, 2020).…”

Section: Decentralized Finance and Sme And Latin Americamentioning

confidence: 99%

Decentralized finance and SME in Latin America

Varaco¹

2021

Preprint

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Latin America is undergoing a profound reorganization. Though the worst years of the recession seem tobe behind us, the future remains fraught with uncertainty. Latin American nations will need to adapt tooperating in an increasingly deregulated and open economy governed by market sovereignty in thecoming years. Commitment to market forces, on the other hand, should not entail the State ceasing tointervene in the economy, but rather redefining the scope and intensity of its engagement. Futurepublic policies should shift away from managing a basic reality defined by governmental laws andcontrols and toward managing a more complex environment defined by numerous actors, private andpublic, operating under competitive norms and interacting with one another. Within this broadercontext, decentralization processes emerge as a primary forum for state transformation. This articlediscusses the primary qualities that must be retained by an economic adjustment plan aimed atachieving compatible fundamental macroeconomic balances and ensuring democracy's survival. Second,the study argues for seeing the present trend toward decentralization not only as a political byproductof democratic consolidation, but as a crucial component of a broader strategy of positive adjustment.

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What’s holding back blockchain finance? On the possibility of decentralized autonomous finance

Cited by 24 publications

References 15 publications

The Blockchain Oracle Problem in Decentralized Finance—A Multivocal Approach

The Blockchain Oracle Problem in Decentralized Finance—A Multivocal Approach

The Blockchain Oracle Problem in Decentralized Finance - A Multivocal Approach

Decentralized finance and SME in Latin America

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