[en] Bitcoin and Ethereum are frequently promoted as decentralized, but developers and academics question their actual decentralization. This motivates further experiments with public permissionless blockchains to achieve decentralization along technical, economic, and political lines. The distribution of tokenized voting rights aims for political decentralization. Tokenized voting rights achieved notoriety within the nascent field of decentralized finance (DeFi) in 2020. As an alternative to centralized crypto-asset exchanges and lending platforms (owned by companies like Coinbase and Celsius), DeFi developers typically create non-custodial projects that are not majority-owned or managed by legal entities. Holders of tokenized voting rights can instead govern DeFi projects. To scrutinize DeFi’s distributed governance strategies, we conducted a multiple-case study of non-custodial, Ethereum-based DeFi projects: Uniswap, Maker, SushiSwap, Yearn Finance, and UMA. Our findings are novel and surprising: quantitative evaluations of DeFi’s distributed governance strategies reveal a failure to achieve political decentralization.
Centre de recherche :
- Interdisciplinary Centre for Security, Reliability and Trust (SnT) > Other
Disciplines :
Bibliothéconomie & sciences de l’information Droit, criminologie & sciences politiques: Multidisciplinaire, généralités & autres Ingénierie, informatique & technologie: Multidisciplinaire, généralités & autres
Auteur, co-auteur :
BARBEREAU, Tom Josua ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
SMETHURST, Reilly ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
PAPAGEORGIOU, Orestis ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
RIEGER, Alexander ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
FRIDGEN, Gilbert ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
Co-auteurs externes :
no
Langue du document :
Anglais
Titre :
DeFi, Not So Decentralized: The Measured Distribution of Voting Rights
Date de publication/diffusion :
janvier 2022
Nom de la manifestation :
55th Hawaii International Conference on System Sciences
Organisateur de la manifestation :
University of Hawaii
Lieu de la manifestation :
Maui, Hawaii, Etats-Unis
Date de la manifestation :
from 03-01-22 to 07-01-22
Manifestation à portée :
International
Titre de l'ouvrage principal :
Proceedings of the Hawaii International Conference on System Sciences 2022
Amler, H., L. Eckey, S. Faust, M. Kaiser, P. Sandner, and B. Schlosser, “DeFi-ning DeFi: Challenges & Pathway”, arXiv: Cryptography & Security, 2021.
Katona, T., “Decentralized Finance: The Possibilities of a Blockchain 'Money Lego' System”, Financial and Economic Review 20(1), 2021, pp. 74-102.
Zetzsche, D.A., D.W. Arner, and R.P. Buckley, “Decentralized Finance”, Journal of Financial Regulation 6(2), 2020, pp. 172-203.
Kostakis, V., and C. Giotitsas, “The (A)Political Economy of Bitcoin”, tripleC 12(2), 2014.
De Tocqueville, A., L'Ancien Régime et la Révolution, Michel-Lévy Frères, Paris, 1856.
De Filippi, P., and B. Loveluck, “The invisible politics of Bitcoin: governance crisis of a decentralised infrastructure”, Internet Policy Review 5(3), 2016.
Hsieh, Y.-Y., J.-P. Vergne, and S. Wang, “Chapter 3: The internal and external governance of blockchain-based organizations”, In M. Campbell-Verduyn, ed., Bitcoin and Beyond: Cryptocurrencies, Blockchains and Global governance. Routledge, Taylor & Francis Group, London; New York, 2017.
Reijers, W., and M. Coeckelbergh, “The Blockchain as a Narrative Technology: Investigating the Social Ontology and Normative Configurations of Cryptocurrencies”, Philosophy & Technology 31(1), 2018, pp. 103-130.
Parkin, J., “The senatorial governance of Bitcoin: making (de)centralized money”, Economy and Society 48(4), 2019, pp. 463-487.
Schneider, N., “Decentralization: an incomplete ambition”, Journal of Cultural Economy 12(4), 2019, pp. 265-285.
Gochhayat, S.P., S. Shetty, R. Mukkamala, P. Foytik, G.A. Kamhoua, and L. Njilla, “Measuring Decentrality in Blockchain Based Systems”, IEEE Access 8, 2020, pp. 178372-178390.
Gervais, A., G.O. Karame, V. Capkun, and S. Capkun, “Is Bitcoin a Decentralized Currency?”, IEEE Security & Privacy 12(3), 2014, pp. 54-60.
Oliveira, L., L. Zavolokina, I. Bauer, and G. Schwabe, “To Token or not to Token: Tools for Understanding Blockchain Tokens”, International Conference of Information Systems, s.n. (2018).
Yin, R.K., Case study research and applications: design and methods, SAGE, Los Angeles London New Dehli Singapore Washington DC Melbourne, 2018.
Kaplan, B., and D. Duchon, “Combining Qualitative and Quantitative Methods in Information Systems Research: A Case Study”, MIS Quarterly 12(4), 1988, pp. 571.
Nagarajan, S., “Bitcoin hit the $1 trillion market cap milestone twice as fast as Amazon and three times faster than Apple, data shows”, Business Insider, 2021.
Nakamoto, S., “Bitcoin: A Peer-to-Peer Electronic Cash System”, 2008.
Böhme, R., N. Christin, B. Edelman, and T. Moore, “Bitcoin: Economics, Technology, and Governance”, Journal of Economic Perspectives 29(2), 2015, pp. 213-238.
De Filippi, P., “Bitcoin: a regulatory nightmare to a libertarian dream”, Internet Policy Review 3(2), 2014, pp. 11.
Foley, S., J.R. Karlsen, and T.J. Putniņš, “Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed through Cryptocurrencies?”, The Review of Financial Studies 32(5), 2019, pp. 1798-1853.
Vigna, P., and M. Casey, The age of cryptocurrency: how bitcoin and the blockchain are challenging the global economic order, Picador, St. Martin's Press, New York, 2016.
Pazaitis, A., P. De Filippi, and V. Kostakis, “Blockchain and value systems in the sharing economy: The illustrative case of Backfeed”, Technological Forecasting and Social Change 125, 2017, pp. 105-115.
Gupta, M., and P. Gupta, “Gini Coefficient Based Wealth Distribution in the Bitcoin Network: A Case Study”, In R. Sharma, A. Mantri and S. Dua, eds., Computing, Analytics and Networks. Springer Singapore, Singapore, 2018, 192-202.
World Bank, “Gini Index (World Bank estimate)”, The World Bank Data, 2019. https://data.worldbank.org/indicator/SI.POV.GINI
Lin, Q., C. Li, X. Zhao, and X. Chen, “Measuring Decentralization in Bitcoin and Ethereum using Multiple Metrics and Granularities”, 2021 IEEE 37th International Conference on Data Engineering Workshops (ICDEW), (2021), 80-87.
de Vries, A., “Bitcoin's Growing Energy Problem”, Joule 2(5), 2018, pp. 801-805.
Drummer, D., and D. Neumann, “Is code law? Current legal and technical adoption issues and remedies for blockchain-enabled smart contracts”, Journal of Information Technology 35(4), 2020, pp. 337-360.
Lehmann, M., “Who Owns Bitcoin? Private Law Facing the Blockchain”, European Banking Institute, 2019.
Möser, M., R. Böhme, and D. Breuker, “Towards Risk Scoring of Bitcoin Transactions”, In R. Böhme, M. Brenner, T. Moore and M. Smith, eds., Financial Cryptography and Data Security. Springer Berlin Heidelberg, 2014, 16-32.
Buterin, V., “Ethereum: A next-generation smart contract and decentralized application platform”, 2014.
Buterin, V., “DAOs, DACs, DAs and More: An Incomplete Terminology Guide”, Ethereum Blog, 2014.
Wright, A., and P. De Filippi, “Decentralized Blockchain Technology and the Rise of Lex Cryptographia”, SSRN Electronic Journal, 2015.
Sunyaev, A., N. Kannengießer, R. Beck, et al., “Token Economy”, Business & Information Systems Engineering, 2021.
Andersen, J.V., and C. Ingram Bogusz, “Self-Organizing in Blockchain Infrastructures: Generativity Through Shifting Objectives and Forking”, Journal of the Association for Information Systems, 2019, pp. 1242-1273.
DuPont, Q., “Chapter 8: Experiments in algorithmic governance - A history and ethnography of 'The DAO,' a failed decentralized autonomous organization”, In Bitcoin and Beyond: Cryptocurrencies, Blockchains and Global governance. Routledge, Taylor & Francis Group, London; New York, 2017.
Chen, Y., and C. Bellavitis, “Blockchain disruption and decentralized finance: The rise of decentralized business models”, Journal of Business Venturing Insights 13, 2020, pp. e00151.
Young, M., “A Guide and Short History of SushiSwap”, BeInCrypto, 2020.
Chen, Y., “Blockchain tokens and the potential democratization of entrepreneurship and innovation”, Business Horizons 61(4), 2018, pp. 567-575.
Catalini, C., and J.S. Gans, “Initial Coin Offerings and the Value of Crypto Tokens”, MIT Sloan Research Paper 5347(18), 2018, pp. 37.
Fridgen, G., F. Regner, A. Schweizer, and N. Urbach, “Don't Slip on the Initial Coin Offering - A Taxonomy for a Blockchain enabled form of Crowdfunding”, Proceedings of the 26th European Conference on Information Systems, (2018).
SushiSwap, “The SushiSwap Project: An evolution of Uniswap with SUSHI tokenomics”, SushiSwap Blog, 2020. https://web.archive.org/web/20200827023308/https:/medium.com/sushiswap/the-sushiswap-projectc4049ea9941e
Gable, G.G., “Integrating case study and survey research methods: an example in information systems”, European Journal of Information Systems 3(2), 1994, pp. 15.
Miles, M.B., A.M. Huberman, and J. Saldaña, Qualitative Data Analysis: an expanded sourcebook, Sage Publications, Inc, 1994.
Klein, H.K., and M.D. Myers, “A Set of Principles for Conducting and Evaluating Interpretive Field Studies in Information Systems”, MIS Quarterly 23(1), 1999, pp. 28.
Jain, R.K., D.-M.W. Chiu, and W.R. Hawe, “A Quantitative Measure Of Fairness And Discrimination For Resource Allocation In Shared Computer Systems”, ACM Transaction on Computer Systems, 1984, pp. 39.
Shannon, C.E., “A Mathematical Theory of Communication”, Bell System Technical Journal 27(3), 1948, pp. 379-423.
Gini, C., “On the Measure of Concentration with Special Reference to Income and Statistics”, Colorade College Publication 208, 1936, pp. 73-79.
Lin, J., “Divergence measures based on the Shannon entropy”, IEEE Transactions on Information Theory 37(1), 1991, pp. 145-151.
Kamps, J., and B. Kleinberg, “To the moon: defining and detecting cryptocurrency pump-and-dumps”, Crime Science 7(1), 2018, pp. 18.
Anderson, R., I. Shumailov, and M. Ahmed, “Making Bitcoin Legal”, In V. Matyáš, P. Švenda, F. Stajano, B. Christianson and J. Anderson, eds., Security Protocols XXVI. Springer International Publishing, Cham, 2018, 243-253.
Renwick, R., and R. Gleasure, “Those who control the code control the rules: How different perspectives of privacy are being written into the code of blockchain systems”, Journal of Information Technology, 2020, pp. 026839622094440.
