Decentralized Basic Income: Creating Wealth with On-Chain Staking and Fixed-Rate Protocols

• URL: http://arxiv.org/abs/2107.14312v2
• Date: Fri, 13 Aug 2021 00:12:43 GMT
• Title: Decentralized Basic Income: Creating Wealth with On-Chain Staking and Fixed-Rate Protocols
• Authors: Hakwan Lau, Stephen Tse
• Abstract summary: We evaluate the mechanisms behind the decentralized finance protocols for generating stable, passive income. Currently, such savings interest rates can be as high as 20% annually, payable in traditional currency values such as US dollars. We will discuss potential pitfalls, assess how these protocols may behave in market cycles, as well as suggest areas for further research and development.
• Score: 0.0
• License: http://creativecommons.org/licenses/by-sa/4.0/
• Abstract: In this review, we evaluate the mechanisms behind the decentralized finance protocols for generating stable, passive income. Currently, such savings interest rates can be as high as 20% annually, payable in traditional currency values such as US dollars. Therefore, one can benefit from the growth of the cryptocurrency markets, with minimal exposure to their volatility risks. We aim to explain the rationale behind these savings products in simple terms. The key to this puzzle is that asset deposits in cryptocurrency ecosystems are of intrinsic economic value, as they facilitate network consensus mechanisms and automated marketplaces (e.g. for lending). These functions create wealth for the participants, and they provide unique advantages unavailable in traditional financial systems. Our review speaks to the notion of decentralized basic income - analogous to universal basic income but guaranteed by financial products on blockchains instead of public policies. We will go through their implementations of how savings can be channeled into the staking deposits in Proof-of-Stake (PoS) protocols, through fixed-rate lending protocols and staking derivative tokens, thereby exposing savers with minimal risks. We will discuss potential pitfalls, assess how these protocols may behave in market cycles, as well as suggest areas for further research and development.

Related papers

• MEV Ecosystem Evolution From Ethereum 1.0 [6.151915040556504]
  In traditional finance, there are possibilities to create values, e.g., arbitrage offers to create value from market inefficiencies or front-running offers to extract value for the participants having privileged roles. Such opportunities are readily available in DeFi ecosystems, where diverse participants engage in financial activities. In this survey, first, we show how lucrative such opportunities can be. Then, we discuss how protocolfollowing participants trying to capture such opportunities threaten to sabotage blockchain's performance. Finally, we review the current state of research trying to restore trustlessness and decentralization to provide all DeFi participants with a fair marketplace
  arXiv  Detail & Related papers  (2024-06-19T14:22:26Z)
• IT Strategic alignment in the decentralized finance (DeFi): CBDC and digital currencies [49.1574468325115]
  Decentralized finance (DeFi) is a disruptive-based financial infrastructure. This paper seeks to answer two main questions 1) What are the common IT elements in the DeFi? And 2) How the elements to the IT strategic alignment in DeFi?
  arXiv  Detail & Related papers  (2024-05-17T10:19:20Z)
• DAM: A Universal Dual Attention Mechanism for Multimodal Timeseries Cryptocurrency Trend Forecasting [3.8965079384103865]
  This paper presents a novel Dual Attention Mechanism (DAM) for forecasting cryptocurrency trends using multimodal time-series data. Our approach integrates critical cryptocurrency metrics with sentiment data from news and social media analyzed through CryptoBERT. By combining elements of distributed systems, natural language processing, and financial forecasting, our method outperforms conventional models like LSTM and Transformer by up to 20% in prediction accuracy.
  arXiv  Detail & Related papers  (2024-05-01T13:58:01Z)
• Enhancing Trust and Privacy in Distributed Networks: A Comprehensive Survey on Blockchain-based Federated Learning [51.13534069758711]
  Decentralized approaches like blockchain offer a compelling solution by implementing a consensus mechanism among multiple entities. Federated Learning (FL) enables participants to collaboratively train models while safeguarding data privacy. This paper investigates the synergy between blockchain's security features and FL's privacy-preserving model training capabilities.
  arXiv  Detail & Related papers  (2024-03-28T07:08:26Z)
• Emergent Outcomes of the veToken Model [0.02730969268472861]
  Vote-Escrowed Token (veToken) model requires voters to escrow or lock tokens of value for an extended period in exchange for voting weight. We show that voting behaviour follows bribes set by higher-level protocols, and that the cost per vote varies depending on how it is acquired. We show that voting markets such as Votium largely determine the outcome of fortnightly votes held by Convex Finance.
  arXiv  Detail & Related papers  (2023-11-29T12:33:45Z)
• A Tale of Two Currencies: Cash and Crypto [0.0]
  We discuss numerous justifications for why crypto-currencies would be highly conducive for the smooth functioning of today's society. We summarize seven fundamental innovations that would be required for participants to have greater confidence in decentralized finance.
  arXiv  Detail & Related papers  (2023-02-13T13:30:43Z)
• Uniswap Liquidity Provision: An Online Learning Approach [49.145538162253594]
  Decentralized Exchanges (DEXs) are new types of marketplaces leveraging technology. One such DEX, Uniswap v3, allows liquidity providers to allocate funds more efficiently by specifying an active price interval for their funds. This introduces the problem of finding an optimal strategy for choosing price intervals. We formalize this problem as an online learning problem with non-stochastic rewards.
  arXiv  Detail & Related papers  (2023-02-01T17:21:40Z)
• Rogue Protocol: A Framework For NFT Royalties Tokenisation [0.0]
  We propose a cryptographic system that ties the price of tokens to the success of a decentralised activity. This guarantees the fair distribution of tokens, and rewards founders and participants in the system in line with the amount of risk they are taking.
  arXiv  Detail & Related papers  (2022-10-21T13:02:04Z)
• Online Learning of Competitive Equilibria in Exchange Economies [94.24357018178867]
  In economics, the sharing of scarce resources among multiple rational agents is a classical problem. We propose an online learning mechanism to learn agent preferences. We demonstrate the effectiveness of this mechanism through numerical simulations.
  arXiv  Detail & Related papers  (2021-06-11T21:32:17Z)
• Efficiency in Digital Economies -- A Primer on Tokenomics [55.41644538483948]
  cryptographic tokens are a new digital paradigm that can facilitate the establishment of economic incentives in digital ecoystems. We show how certain principles and values that arise from the evolutionary process of digital cooperation can lead to a market economy characterized by economic efficiency of both individuals and the tokenized ecosystem as a whole.
  arXiv  Detail & Related papers  (2020-08-06T09:31:56Z)
• Regulation conform DLT-operable payment adapter based on trustless - justified trust combined generalized state channels [77.34726150561087]
  Economy of Things (EoT) will be based on software agents running on peer-to-peer trustless networks. We give an overview of current solutions that differ in their fundamental values and technological possibilities. We propose to combine the strengths of the crypto based, decentralized trustless elements with established and well regulated means of payment.
  arXiv  Detail & Related papers  (2020-07-03T10:45:55Z)

This list is automatically generated from the titles and abstracts of the papers in this site.

This site does not guarantee the quality of this site (including all information) and is not responsible for any consequences.