Cryptofinance | Cryptoasset analytics

Understanding and managing emerging financial technologies and paradigms like Decentralized Finance (DeFi) protocols and services.

Our main research questions

How can we systematically assess emerging technologies and financial paradigms, such as Decentralized Finance (DeFi), that aim at disrupting established financial service ecosystems?

Which technical and socio-economic opportunities and risks are associated with emerging technologies and financial paradigms?

How can we measure structural aspects and dynamic processes in cryptoasset ecosystems in order to make informed decision based on scientific evidence?

How are key actors in cryptoasset ecosystems like Bitcoin and Ethereum intertwined with each other?

How can we quantify systemic risk and measure the robustness of cryptoasset ecosystems?

How can regulatory measures help ensure that such technologies are beneficial to end users and society as a whole?

Making cryptocurrencies and related products safer

 

A cryptoasset ecosystem represents a community of actors, who interact as a system and are linked together through cryptoasset transfers. Well known examples are Bitcoin or Ethereum, which operate on Distributed Ledger technology.

 

Lacking a full understanding of financial products and their associated risks can have serious systemic consequences, as we could observe during the financial crisis in 2008. While traditional finance is now largely regulated, Decentralized Finance (DeFi) stands for a new financial paradigm that aims at disrupting established financial services ecosystems.

 

DeFi offers financial services and products as blockchain-based smart contracts. This provides the possibility of creating complex financial products and embedding them in new governance models, which, however, involves risks that have not yet been fully understood and could have unforeseeable systemic effects. Examples include decentralized cryptoasset exchanges such as Uniswap or distributed lending protocols such as Maker or Compound.

 

The development of DeFi protocols is still in its infancy, but their market capitalization has grown rapidly from just under 4 billion to 11 billion USD within three months in fall 2020 alone. So it is time to think about how such protocols actually work and what opportunities and risks are associated with them.

 

Goals

 

The Austrian Institute of Technology (AIT) and the Complexity Science Hub Vienna (CSH) are now joining forces and aim at building an interdisciplinary team of scientists focusing on the analysis of Decentralized Finance (DeFi) protocols and services. AIT has many years of experience in the analysis of cryptoasset ecosystems and with its GraphSense Platform a suitable tool for this, CSH has a strong background in analysis network structures of financial markets and quantifying their associated risks.

 

Expected Results

 

Expected results of this cooperation are novel scientific methods allowing assessments of technical and socio-economic risks associated with DeFi protocols as well as analysis of specific protocols and services.