Why Stake When You Can Borrow?

SoK: Lending Pools in Decentralized Finance

“…Verification of DeFi applications is a fairly recent research area where several techniques have been applied. We focus our discussion on works devoted to formal modelling and reasoning of DeFi applications, which typically follow two parallel directions: verification of the model properties [9,5,2,32], and statistical analysis of the model variables [4,14,22,13,19].…”

“…The quantitative variables estimation is also achieved by performing Monte-Carlo simulations, with a more closely look at the behaviours displayed by agents [14]. In fact, most of this research in this line [22,13,4] bases its results on Agent-Based Simulations, which is employed to stress test the actual smart contracts implementations being executed on a "custom-built Ethereum virtual machine that is written in C++" [22]. This research direction, although suggesting promising results, is not ultimately supported by strong statistical guarantees, since the number of Monte Carlo simulations performed to run their analyses is arbitrarily chosen and not backed by a formal justification [22,19].…”

Blockchain and cryptocurrencies: economic and financial research

“…For instance, Automated Market Makers are truly decentralized trading platforms (Angeris and Chitra 2020). Defi also offers new products such as flash loans or staking derivatives for cryptocurrencies like Solana or Ethereum 2.0 based on a protocol using PoS (Chitra and Evans 2020). The link with traditional finance is made through "stable coins"-crypto-currencies whose price is pegged to the US dollar.…”