The Political Economy of Blockchain Governance

Lee, Barton E.; Moroz, Daniel J.; Parkes, David C.

doi:10.2139/ssrn.3537314

Cited by 10 publications

(11 citation statements)

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“…While there is existing work on governance in relation to blockchains more broadly (e.g. [42], [43], [44]), there is still a limited understanding of the properties of different mechanisms that can be used both for blockchains and DeFi.…”

Section: F Governancementioning

confidence: 99%

SoK: Decentralized Finance (DeFi)

Werner¹,

Perez²,

Gudgeon³

et al. 2021

Preprint

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Decentralized Finance (DeFi), a blockchain powered peer-to-peer financial system, is mushrooming. One year ago the total value locked in DeFi systems was approximately 600m USD, now, as of January 2021, it stands at around 25bn USD. The frenetic evolution of the ecosystem makes it challenging for newcomers to gain an understanding of its basic features. In this Systematization of Knowledge (SoK), we delineate the DeFi ecosystem along its principal axes. First, we provide an overview of the DeFi primitives. Second, we classify DeFi protocols according to the type of operation they provide. We then go on to consider in detail the technical and economic security of DeFi protocols, drawing particular attention to the issues that emerge specifically in the DeFi setting. Finally, we outline the open research challenges in the ecosystem.

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Section: F Governancementioning

confidence: 99%

SoK: Decentralized Finance (DeFi)

Werner¹,

Perez²,

Gudgeon³

et al. 2021

Preprint

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“…3 (25), process (25), platform (24), participate (21), control (19), and network (18). To better understand blockchain governance, seven studies adapt theories of governance from other domains, including IT governance [5,6,7], corporate governance [8,9], complex adaptive systems [10], and formal political economy [11].…”

Section: Rq1: What Is Blockchain Governance?mentioning

confidence: 99%

“…• Application provider (11): Application providers include cryptocurrency exchanges, custodians, (both software and hardware) wallet providers, and banks [8,13,15,23,24,25]). Their applications directly or indirectly interoperate with the blockchain platforms and can be considered as part of blockchain ecosystems.…”

Section: Rq5: Who Is Involved In Blockchain Governance?mentioning

confidence: 99%

A Systematic Literature Review on Blockchain Governance

Liu¹,

Lu²,

Zhu³

et al. 2021

Preprint

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Blockchain has been increasingly used as a software component to enable decentralisation in software architecture for a variety of applications. Blockchain governance has received considerable attention to ensure the safe and appropriate use and evolution of blockchain, especially after the Ethereum DAO attack in 2016. To understand the state-of-the-art of blockchain governance and provide an actionable guidance for academia and practitioners, in this paper, we conduct a systematic literature review, identifying 34 primary studies. Our study comprehensively investigates blockchain governance via 5W1H questions.The study results reveal several major findings: 1) the adaptation and upgrade of blockchain are the primary purposes of blockchain governance, while both software quality attributes and human value attributes need to be increasingly considered; 2) blockchain governance mainly relies on the project team, node operators, and users of a blockchain platform; and 3) existing governance solutions can be classified into process mechanisms and product mechanisms, which mainly focus on the operation phase over the blockchain platform layer.

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“…Theorem 1. If hyper-parameters are selected such that Assumption 1, 2, and 3 all are satisfied, and there exist δ β and δ * that satisfy (11) and (29) respectively, then there is a unique equilibrium with δ = δ * and F = ϕ(δ * ).…”

Section: F * (δ) W/ Participation Constraintmentioning

confidence: 99%

“…While there is a body of work on blockchain governance (e.g. [17,1,11]), DeFi governance is sparsely studied. [8] proposed a framework for modeling DeFi governance that extends capital structure models from corporate finance (see [4,16]).…”

Section: Introductionmentioning

confidence: 99%

Decentralized Governance of Stablecoins with Closed Form Valuation

Huo¹,

Klages‐Mundt²,

Minca³

et al. 2021

Preprint

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We model incentive security in non-custodial stablecoins and derive conditions for participation in a stablecoin system across risk absorbers (vaults/CDPs) and holders of governance tokens. We apply option pricing theory to derive closed form solutions to the stakeholders' problems, and to value their positions within the capital structure of the stablecoin. We derive the optimal interest rate that is incentive compatible, as well as conditions for the existence of equilibria without governance attacks, and discuss implications for designing secure protocols.

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The Political Economy of Blockchain Governance

Cited by 10 publications

References 0 publications

SoK: Decentralized Finance (DeFi)

SoK: Decentralized Finance (DeFi)

A Systematic Literature Review on Blockchain Governance

Decentralized Governance of Stablecoins with Closed Form Valuation

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