UCL CBT Call for Proposals and winner announcements
Call for Proposals
De-Rippling the Price Trajectory of XRP
GUIDO GERMANO, JIAHUA XU
Ripple’s XRP is the 3rd largest cryptocurrency in the world in terms of market cap, and the largest cryptocurrency collaborating with authoritative, conventional financial institutions such as banks. Acting as an exchange relay currency and also designed for facilitating micropayments, XRP is expected to play a pivotal rule in the future global payment economy. Naturally, the stability, or at least the predictability of XRP, will be crucial to Ripple’s success. In this study, we model the time series of XRP price and examine the relationship of external factors on the price oscillations. We aim to establish a better understanding on the pattern of the XRP price trajectory, which would help us device appropriate measures to counteract undesired price movements and hence strengthen confidence in the Ripple ecosystem.
Analysis and Modelling of Dark Assets in Cryptocurrencies
PAOLO BARUCCA, CLAUDIO J. TESSONE
Cryptocurrencies, as the most widespread application of blockchain-based systems, are designed to serve – primarily – as a payment system in which the transaction verification takes place in a decentralised fashion. In order to do so, they resort on a public ledger that stores the transaction information while preserving the anonymity (resorting on pseudonimity) of the system participants. These particular features enabled the emergence of darknet marketplaces, online platforms selling illegal goods and services, like the original marketplace Silk Road. While has been discussed about the relative weight and impact of illegal transactions in cryptocurrencies, no analysis has been performed so far that allows to quantify its impact, even into nowadays’ activity. This research project will, for the first time, make a systematic study of the share and diffusion of dark money assets within specific cryptocurrency economies. To achieve it, this project will leverage on large- scale data forensic analysis of the cryptoassets which has been traded in illicit markets. Specifically, the project will focus on (but not be limited to) Bitcoin and will utilise data from Law Enforcement Agencies and public sources to construct a solid ground truth to pinpoint the articulation points of these assets. Then, based on methods originated in network science and complexity theory, the results will be compared with parsimonious models that serve as benchmarks and allow to understand the mechanisms behind the process of diffusion of these assets. We expect that this project will contribute to the widening research area of blockchain analytics and forensics.
Designing for Public Policy Stablecoins
Philip Treleaven, Thamim Ahmed, Francesca Medda, Alexander Lipton, Henry Balani
Distributed Ledger Technologies, specifically the development of crypto assets and their characteristics of ‘programmable money’ which enable economic coordination and incentive scheme(s), have seen to advancements in cross-border payment systems. However, the most challenging problems in adoption of crypto assets have been primarily driven by slow moving regulations. Thus, this research project will look to design and execute a theoretical government backed digital currency, which will be modelled as a ‘stablecoin’. Stablecoins provide a near term solution for providing stability and exchange between fiat and crypto-assets. The author assumes for central bank digital currencies will become mainstream for a few socio- economic drivers; 1. Macro trends: – Digitisation of fiat currency – Economic security threat: Digital advanced Asian economies have capabilities of exporting and imposing their monetary policies. 2. Regulation: with technology regulation there tends to also be an increase in adoption. 3. Competition: To increase competitiveness in payment markets, which will increase financial inclusion and combat crime. The report will investigate, how monetary policy can be designed using smart contracts, and more specifically using stablecoins. The aim of the research project is to develop a smart contract framework (and technology) for deploying public policy instruments across multiple sectors to establish a theory for ‘stablecoin of stablecoins’ (eg: can a monetary policy token be pegged to an education policy token). The project will also look to bridge the knowledge and language gap between practitioners and academics and researchers.
Next Generation Smart Contracts – Improving Temporal Specificity
Christopher D. Clack, Alan Midgley
“A key challenge in developing smart contracting solutions for real-world applications is the accurate ‘interfacing’ between the natural-language contract documentation and the programming-language smart contract code. How can we be sure that the code is an accurate reflection of the contract? Temporal aspects of contracts are foundational to many operational details (what must be done and when) and to the exercising of rights and obligations. There are complexities in both the way that time is expressed (e.g. with use of modal verbs and imagined scenarios) and the way that time is treated pragmatically during performance (e.g. in recording times such as when an event is expected to start and end, when it actually starts and ends, and when it is “deemed” to have started and ended for contractual purposes). – Vague indications of time (“late”, “soon”) have industry-specific and context-specific interpretation. – Time may be an instantaneous point (e.g. a theoretical deadline), a collection of discrete days (e.g. available days for delivery), or a continuous interval (e.g. delivery is permitted at any time between a start time and an end time). – Time has varying precision in different industries (to the nearest day, the nearest hour, or perhaps to the nearest second). – Time-related interdependencies exist at nested levels within a contract and there may be lack of clarity on the required sequencing of actions. To address these shortcomings, smart contracts need a better and more formal understanding, representation and logic of time as it is expressed in real-world contracts.”
Incentives and Governance Model for Decentralized Exchanges
Operating in the Crypto-Asset Ecosystem
Giacomo Livan, Simone Righi, Francesco Pierangeli, Moritz Platt
Speculation is a dominant force in the crypto-asset ecosystem resulting in high volatility and low liquidity. The cryptocurrency market differs from conventional forex or equity markets. Exchanges are considered at the “top of the food chain” in finance as they effectively influence the investment behaviour prevailing in the market, their impact is reflected on price dynamics and liquidity. As a consequence, the cryptocurrency market needs a solid system of exchanges providing capital deposits, order books, order matching, and asset exchange. This research will focus on the cryptocurrency exchange market and the type of exchanges currently available: centralized, decentralized, currency centric and currency neutral. It aims at analysing the economic incentives behind centralized (CEX) and decentralized (DEX) exchanges to identify an appropriate governance model for operating in the crypto-asset ecosystem. The research questions examined are: What is the impact of different governance models used in the cryptocurrency market? How can we develop a smart contract based DEX which enables exchange rate monitoring and probabilistic market making? Answering these questions poses substantial economic and technical challenges. The first part of the research will be dedicated to understand the current state of crypto exchanges including actors involved and governing mechanisms applied, while the second part will propose a proof-of- concept implementation of a smart contract based trustless cross-chain DEX, imposing as few technical requirements as possible on the tradeable crypto currencies. This will contribute to the current literature on the cryptocurrency market structures and the interplay between cryptocurrencies and the exchange market.
Digital toolbox to assess and visualise development practices in
opensource distributed ledger platforms
Fabio Caccioli, Silvia Bartolucci, Simone Righi, Giuseppe Destefanis, Marco Ortu, Mario Stumpo
Value and reputation of crypto assets (e.g. tokens, cryptocurrencies) relying on a distributed ledger (DL) platform depend on the perceived resilience of the community of developers engaging with the project. Understanding how the underlying consensus protocol for transactions validation or the smart contract language is built and maintained by the community directly informs on the security and risks of the platform. In the context of major open-source development projects in the crypto assets space, the aim of this proposal is threefold: (i) to look at the community of developers and the software complexity through the prism of network theory and sentiment analysis, (ii) to use this knowledge to predict upcoming fragmentation and disagreements (e.g. possibility of forks) within the community and the potential impact on prices of the associated tokens and (iii) to build a prototype of a user-friendly digital toolbox where such information can be interactively accessed and visualised. We will extract from Github comprehensive datasets about developers’ activities (e.g. ‘commits’ and ‘comments’ submitted), interactions types (e.g. polite vs. impolite exchanges) and code structure (e.g. contributors to specific parts of the code, average length). The toolbox will include software for emotion and sentiment detection from developers’ comments, network measures for both the software and developers’ community graph, as well as tools for extracting software metrics. This project proposes a novel avenue to aggregate information about the platform quality and development practices of DL open-source projects and make it intelligible to practitioners and end-users alike.
Decentralized Platform Economics: Optimal Incentives and Structure
Simone Righi, Fabio Caccioli, Giacomo Livan, Elias Carroni
Digital platforms provide automatized marketplaces that aggregate and match the demand and supply for goods and services submitted by a large number of individual users. Typically, these platforms are owned by the provider of the service and are centralized. The emergence and spreading of blockchain technologies provide, for the first time, the possibility to create decentralized platforms, with the potential of shifting the distribution of surplus – typically extracted by the owner of the marketplace – toward consumers, and of widening access to services. In this project, we will study the structure of incentives and trade-offs faced by the users of digital platforms built on blockchain technologies, under different key design choices concerning the rights to read and write information and to commit changes to the blockchain. To this end, we will introduce an equilibrium model aimed at comparatively assessing the efficiency and viability of different platform designs and an agent-based model, inspired by the studies on complex systems, that mimics the endogenous co- evolution of adoption dynamics and design choices made by participants. From the industry point of view, our study will inform the design of sustainable and more efficient decentralized platforms. From the academic point of view, the project will provide a leading contribution to the establishment of a new field in economic studies concerned with the analysis of blockchain-enabled decentralized platforms.
A Fair and Independent Blockchain Evaluation Framework and Advisor
Earl Barr, Michail Basios, Nikolaos Anyfantis
The huge success of Blockchain technology led to the development of thousands of blockchain solutions, each providing different properties. Some of those projects relied on a fork of existing technologies such as Bitcoin, or Ethereum, while others proposed completely new architectures and features (e.g. Ripple, Hyperledger). This huge number of Blockchain solutions and their possible configurations complexed the industrial and research community to properly understand and evaluate them. Additionally, this confusion made it difficult to evaluate fairly individuals with Blockchain expertise, leading many individuals claiming that they are Blockchain experts, without having a commonly accepted certificate or degree. The need for standardising and regulating the Blockchain space has already been investigated by different initiatives, such as ISO/TC 307, R3, and Accord Project. The common conclusion is that a future standardisation of the blockchain space will benefit every industry and lead to easier adoption. In this proposal, we focus on standardising the Blockchain space by building a technical framework that will evaluate the performance of existing Blockchain solutions and build a set of minimum requirements, necessary for individuals that need to be Blockchain experts. Using our research finding in the area of automatic parameter tuning and automatic smart-contract transformation, we will build a framework that helps users select a Blockchain setup specific to their requirements. In particular, the framework will provide a sorted list of Blockchain solutions instantiated with a set of optimal tunable parameters, ranked automatically by the models, thus providing a fair and independent assessment.
PHILIP TRELEAVEN, SURAN GOONATILAKE
We recently witnessed the growth (and slowdown) of Initial Coin Offerings which allowed entrepreneurs to raise risk capital (and also build communities). ICOs were enthusiastically welcomed by entrepreneurs partly because of the scarcity of Venture Capital (VC) which at $200B per annum is a relatively small asset class in global finance. We propose Coded Capital – built upon DLT – which aims to provide a ‘new infrastructure’ to venture capital and aims to overcome some of its limitations.
One of the problems Coded Capital aims to resolve is the Information Asymmetry between investee companies and VCs. The problem here is not dissimilar to information access that a consumer has versus a producer of goods – classes of problems to which DLT has been successfully applied to [Aste et al 2017]. It is this information asymmetry that VCs use to justify Liquidation Preferences and other mechanisms that many entrepreneurs regard as unreasonable.
Through a combination of a distributed ledger which records all investee company transactions, a smart contract running on this ledger, and through a set of operating principals mutually agreed between a VC and investee company, Coded Capital aims to reduce the risk for investors and provide more favourable operating mechanisms for investee companies.
As part of this project we will:
(1) Gather representative transactions-level data sets
(2) Encode all data on a sample distributed ledger
(3) Develop smart contracts with Coded Capital principles
(4) Run simulations and perform analyses
(5) Write up results, prepare publications and future research.