The Fundamental Value of Art NFTs

E-print/Working paper (2023)

Art-related non-fungible tokens (NFTs) took the digital art space by storm in 2021, generating massive amounts of volume and attracting a large number of users to a previously obscure part of blockchain ... [more ▼]

Art-related non-fungible tokens (NFTs) took the digital art space by storm in 2021, generating massive amounts of volume and attracting a large number of users to a previously obscure part of blockchain technology. Still, very little is known about the attributes that influence the price of these digital assets. This paper attempts to evaluate the level of speculation associated with art NFTs, comprehend the characteristics that confer value on them and design a profitable trading strategy based on our findings. We analyze 860,067 art NFTs that have been deployed on the Ethereum blockchain and have been involved in 317,950 sales using machine learning methods to forecast the probability of sale, the trade frequency and the average price. We find that NFTs are highly speculative assets and that their price and recurrence of sale are heavily determined by the floor and the last sale prices, independent of any fundamental value. [less ▲]

Decentralised finance's timocratic governance: The distribution and exercise of tokenised voting rights

in Technology in Society (2023), 73

Ethereum's public distributed ledger can issue tokenised voting rights that are tradable on crypto-asset exchanges by potentially anyone. Ethereum thus enables global, unincorporated associations to ... [more ▼]

Ethereum's public distributed ledger can issue tokenised voting rights that are tradable on crypto-asset exchanges by potentially anyone. Ethereum thus enables global, unincorporated associations to conduct governance experiments. Such experiments are crucial to Decentralised Finance (DeFi). DeFi is a nascent field of unlicensed, unregulated, and non-custodial financial services that utilise public distributed ledgers and crypto-assets rather than corporate structures and sovereign currencies. The inaugural Bloomberg Galaxy DeFi Index, launched in August 2021, included nine Ethereum-based projects – non-custodial exchanges as well as lending and derivatives platforms. Each project is governed, at least in part, by unregistered holders of tokenised voting rights (also known as governance tokens). Token-holders typically vote for or against coders' improvement proposals that pertain to anything from the allocation of treasury funds to a collateral's risk parameters. DeFi's governance thus depends on the distribution and exercise of tokenised voting rights. Since archetypal DeFi projects are not managed by companies or public institutions, not much is known about DeFi's governance. Regulators and law-makers from the United States recently asked if DeFi's governance entails a new class of “shadowy” elites. In response, we conducted an exploratory, multiple-case study that focused on the tokenised voting rights issued by the nine projects from Bloomberg's inaugural Galaxy DeFi index. Our mixed methods approach drew on Ethereum-based data about the distribution, trading, staking, and delegation of voting rights tokens, as well as project documentation and archival records. We discovered that DeFi projects' voting rights are highly concentrated, and the exercise of these rights is very low. Our theoretical contribution is a philosophical intervention: minority rule, not “democracy”, is the probable outcome of token-tradable voting rights and a lack of applicable anti-concentration laws. We interpret DeFi's minority rule as timocratic. [less ▲]

An in-depth investigation of the performance characteristics of Hyperledger Fabric

in Computers and Industrial Engineering (2022), 173

Private permissioned blockchains are deployed in ever greater numbers to facilitate cross-organizational processes in various industries, particularly in supply chain management. One popular example of ... [more ▼]

Private permissioned blockchains are deployed in ever greater numbers to facilitate cross-organizational processes in various industries, particularly in supply chain management. One popular example of this trend is Hyperledger Fabric. Compared to public permissionless blockchains, it promises improved performance and provides certain features that address key requirements of enterprises. However, also permissioned blockchains are still not as scalable as centralized systems, and due to the scarcity of theoretical results and empirical data, their real-world performance cannot be predicted with the necessary precision. We intend to address this issue by conducting an in-depth performance analysis of Hyperledger Fabric. The paper presents a detailed compilation of various performance characteristics using an enhanced version of the Distributed Ledger Performance Scan (DLPS). Researchers and practitioners alike can use the various performance properties identified and discussed as guidelines to better configure and implement their Hyperledger Fabric network. Likewise, they are encouraged to use the DLPS framework to conduct their measurements. [less ▲]

Federal Blockchain Infrastructure Asylum (FLORA) - Piloting and evaluation of the FLORA support system in the context of the AnkER facility Dresden

Report (2022)

Optimal industrial flexibility scheduling based on generic data format

in Energy Informatics (2022, September 07), 5

The energy transition into a modern power system requires energy flexibility. Demand Response (DR) is one promising option for providing this flexibility. With the highest share of final energy ... [more ▼]

The energy transition into a modern power system requires energy flexibility. Demand Response (DR) is one promising option for providing this flexibility. With the highest share of final energy consumption, the industry has the potential to offer DR and contribute to the energy transition by adjusting its energy demand. This paper proposes a mathematical optimization model that uses a generic data model for flexibility description. The optimization model supports industrial companies to select when (i.e., at which time), where (i.e., in which market), and how (i.e., the schedule) they should market their flexibility potential to optimize profit. We evaluate the optimization model under several synthetic use cases developed upon the learnings over several workshops and bilateral discussions with industrial partners from the paper and aluminum industry. The results of the optimization model evaluation suggest the model can fulfill its purpose under different use cases even with complex use cases such as various loads and storages. However, the optimization model computation time grows as the complexity of use cases grows. [less ▲]

Tarzan and chain: exploring the ICO jungle and evaluating design archetypes

in Electronic Markets (2022), 32

The phenomenon of a blockchain use case called initial coin offering (ICO) is drawing increasing attention as a novel funding mechanism. ICO is a crowdfunding type that utilizes blockchain tokens to allow ... [more ▼]

The phenomenon of a blockchain use case called initial coin offering (ICO) is drawing increasing attention as a novel funding mechanism. ICO is a crowdfunding type that utilizes blockchain tokens to allow for truly peer-to-peer investments. Although more than \$7bn has been raised globally via ICOs as at 2018, the concept and its implications are not yet entirely understood. The research lags behind in providing in-depth analyses of ICO designs and their long-term success. We address this research gap by developing an ICO taxonomy, applying a cluster analysis to identify prevailing ICO archetypes, and providing an outlook on the token value market performance for individual archetypes. We identify five ICO design archetypes and display their secondary market development from both a short-term and a long-term perspective. We contribute to an in-depth understanding of ICOs and their implications. Further, we offer practitioners tangible design and success indications for future ICOs. [less ▲]

Guiding Refugees Through European Bureaucracy: Designing a Trustworthy Mobile App for Document Management

in Drechsler, A.; Gerber, A.; Hevner, A. (Eds.) The Transdisciplinary Reach of Design Science Research. DESRIST 2022 (2022, May 25)

After being granted asylum in European countries, refugees need to go through a multitude of administrative processes before they can participate in society. However, these processes are often challenging ... [more ▼]

After being granted asylum in European countries, refugees need to go through a multitude of administrative processes before they can participate in society. However, these processes are often challenging, as refugees struggle to understand them, lack instructions for managing paperwork, and do not possess the required language skills. Prior research emphasizes the role of information and communication technologies to simplify and enable refugee-friendly administrative processes. However, recent research and existing applications mainly focus on information retrieval and do not offer assistance for understanding official letters, completing administrative forms, and managing corresponding documents. Furthermore, refugees are often reluctant to use existing applications as they do not trust their host country’s governments and public authorities. In this research, we aim to address this functional and trust gap. We follow a design science research approach to develop a design for a refugee-centric and trustworthy mobile application that assists refugees along administrative processes. In doing so, we identify three design principles that may guide the development of such applications for refugees. [less ▲]

Blockchain as a driving force for federalism: A theory of cross-organizational task-technology fit

in International Journal of Information Management (2022)

DeFi, Not So Decentralized: The Measured Distribution of Voting Rights

in Proceedings of the Hawaii International Conference on System Sciences 2022 (2022, January)

Bitcoin and Ethereum are frequently promoted as decentralized, but developers and academics question their actual decentralization. This motivates further experiments with public permissionless ... [more ▼]

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. [less ▲]

With or Without Blockchain? Towards a Decentralized, SSI-based eRoaming Architecture

in Proceedings of the 55th Hawaii International Conference on System Sciences (HICSS) (2022)

Fragmentation and limited accessibility of charging infrastructure impede the adoption of electric vehicles. To improve the availability of charging infrastructure independent of providers, eRoaming ... [more ▼]

Fragmentation and limited accessibility of charging infrastructure impede the adoption of electric vehicles. To improve the availability of charging infrastructure independent of providers, eRoaming offers a promising solution. Yet, current eRoaming systems are typically centralized, which raises concerns of market power concentration. While the use of blockchain technology can obviate such concerns, it comes with significant privacy challenges. To address these challenges, we explore a combination of blockchain with self-sovereign identity. Specifically, we apply a design science research approach, which helps us to identify requirements, derive a conceptual architecture, and deduce design principles for decentralized eRoaming and beyond. We find that blockchain may best leverage its benefits when it takes a backseat as a public registry for legal entities. Moreover, we find that the use of self-sovereign identities could improve compliance with privacy regulations, but they should not be overused. [less ▲]