Stablecoins 2.0

Klages‐Mundt, Ariah; Harz, Dominik; Gudgeon, Lewis; Liu, Junyou; Minca, Andreea

doi:10.1145/3419614.3423261

Cited by 47 publications

(6 citation statements)

References 38 publications

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“…Ultimately, as noted by Almeida and Gonçalves (2022), such regulations can ensure that these assets are considered safe havens. However, despite various studies, it is not yet clear how best to regulate these assets, given their global reach (Klages-Mundt et al, 2020). There are several studies that have dealt with stablecoins and the regulation and management of their risk from an accounting and auditing point of view.…”

Section: Literature Review On the Accounting And Auditing Of Stablecoinsmentioning

confidence: 99%

The asset-backing risk of stablecoin trading: the case of Tether

Fernández,

Alonso

2024

EBR

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This article aims to analyse the asset-backing risk of stablecoins, focusing on international accounting standards, classification criteria, and auditing standards and using Tether as a case study. It examines Tether’s issuance, backing, controls, ratios, and regulations to assess risk transmission and mitigation. The results suggest a need for unified and strengthened accounting and auditing standards to enhance user confidence. Liquidity, solvency, and debt ratios were applied to Tether's balance sheets; while Tether has made efforts to increase its transparency, and although it possesses highly liquid assets, challenges remain regarding its liquidity, solvency, and debt. An independent auditors' valuation is crucial for investor confidence, demonstrating that more specific regulations are required for stablecoins. Future research should explore other stablecoins to comprehensively understand the accounting and auditing challenges in the field.

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Section: Literature Review On the Accounting And Auditing Of Stablecoinsmentioning

confidence: 99%

The asset-backing risk of stablecoin trading: the case of Tether

Fernández,

Alonso

2024

EBR

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“…In addition, Klages-Mundt et al [20] proposed a framework for modeling and classifying stablecoins. The authors also formulated and examined the risks associated with stablecoins and their use in the DeFi ecosystem.…”

Section: Related Workmentioning

confidence: 99%

Formal Analysis of Composable DeFi Protocols

Tolmach¹,

Li²,

Lin³

et al. 2021

Preprint

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Decentralized finance (DeFi) has become one of the most successful applications of blockchain and smart contracts. The DeFi ecosystem enables a wide range of crypto-financial activities, while the underlying smart contracts often contain bugs, with many vulnerabilities arising from the unforeseen consequences of composing DeFi protocols together. In this paper, we propose a formal process-algebraic technique that models DeFi protocols in a compositional manner to allow for efficient property verification. We also conduct a case study to demonstrate the proposed approach in analyzing the composition of two interacting DeFi protocols, namely, Curve and Compound. Finally, we discuss how the proposed modeling and verification approach can be used to analyze financial and security properties of interest.

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“…A blockchain is a decentralized, shared, and immutable digital ledger that records transactions in blocks that are linked together cryptographically. Beginning with Bitcoin, purpose-built blockchains have been proposed for a wide variety of applications including payment networks [1], [2], decentralized provision of DNS information [3], [4], gambling [5], social media [6], stablecoins [7], [8] and many others [9]. This early array of purpose-built blockchains was followed by a wave of blockchain projects which aim to be general-purpose in nature, allowing features like Turingcomplete on-chain scripting and other highly customizable functionality [10]- [13].…”

Section: Introductionmentioning

confidence: 99%

The Philos Trust Algorithm: Preventing Exploitation of Distributed Trust

Russell¹,

Brown²

2022

Preprint

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The Philos Marketplace blockchain system is a proposed hierarchical blockchain architecture which allows a large number of individual blockchains to operate in parallel. These parallel chains achieve consensus among one another on a limited set of core operations, while allowing each on-chain application to manage its own data independently of others. This architecture addresses the scalability issues of traditional linear blockchains, but requires novel consensus mechanisms. A central feature of the Philos consensus mechanism is its trust algorithm, which assigns each network node a numerical trust value (or score) indicating the quality of recent past performance. This trust value is then used to determine a node's voting weight at the higher levels of consensus. In this paper, we formally define the Philos trust algorithm, and provide several illustrations of its operation, both theoretically and empirically. We also ask whether a misbehaving node can strategically exploit the algorithm for its personal gain, and show that this type of exploitation can be universally prevented simply by enforcing a mild limit on the number of participants in each of the parallel chains.

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Stablecoins 2.0

Cited by 47 publications

References 38 publications

The asset-backing risk of stablecoin trading: the case of Tether

The asset-backing risk of stablecoin trading: the case of Tether

Formal Analysis of Composable DeFi Protocols

The Philos Trust Algorithm: Preventing Exploitation of Distributed Trust

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