Money generation in decentralized finance: the dynamic model of stable currencies and cryptocurrency shadow banking

人大金融科技研究所 view 63995 2021-12-30 09:40
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The rise of Stabilitycoins aims to meet the demand for secure assets in decentralized finance. Stablecoin issuers use various strategies to convert stored assets into fixed prices. To solve large-scale parts safety, management and strategic planning issues, we have developed best-in-class best-in-class parts management standards and introduced the issue of instability. The system is binary. Securities can last a long time, but change regularly when a stable currency is badly affected and broken. As advisers and stable investors can share the risks, investing can have a negative impact.


Over a decade ago, Bitcoin heralded a new era of digital payments and financial management. Cryptocurrency The banking sector is competitive, offering an environmentally friendly, anonymous and inexpensive global exchange rate, as well as the benefits of smart contracts (Brunnermeier, James, Landau, 2019; Duffie, 2019). However, the massive exchange that emerged from first generation cryptocurrencies restricted their electricity bills as payment. The purpose of a fixed asset is a commitment to hold a fiat or other asset so that the assets in the asset can be redeemed while maintaining a fixed value relative to the base or basket of money.

This paper presents the continuous-time stable dynamic model required for rich processes commonly used in practice, such as open markets, positive demands for consumer ownership, exchange rates or subsidies, and target prices (Bullmann, Klemm ), Pinna, 2019). Banding, repegging, distribution of "second room" (or management tokens) with holdings in stable funds. Our model presents a new unstable process and is necessary for the evaluation of recommendations. It can also be used to identify support for stable services provided by major platforms (such as Facebook).

Creating Stabilitycoins is akin to creating money in shadow banking, for example, creating security assets without the concern of meeting the needs of working investors. Advisors convert assets, for example real cryptocurrencies, into 1: 1 stable currencies that can be traded 1: 1 with fiat money. Lawyers generally want stable users to provide evidence and specify margin rules. When consumer prices fall, consumers keep their savings (by investing in risky assets) to support the value of fixed income securities.

However, the range of stable financing of parallel companies is still in the foreground. Companies can invest heavily to avoid stagnation, when parallel companies have to take on debt or they will go bankrupt. This optional devaluation allows stable firms to avoid expensive inventory, but leads to expansion, leading to bimodal distribution. With large reserves, investors manage the price constantly, so the demand for stable funds is high and the market volume is high. By opening up markets and exchange rates, advisers earn income and increase their capital. In the absence of reserves, investors can slowly replenish their capital and fall into the instability trap, as advisers put consumers at risk of cutting costs, thereby limiting the demand for stable funds, reducing income. Therefore, a stable exchange rate may last for a long time, but the return is slow when the indicator occurs.

Our free article discusses key issues affecting the reliability and stability of exchange rates. Unlike speculative attacks and the collective failure of unsecured stability coins in the study by Routledge and Zetlin Jones (2021), we describe a new risk amplification mechanism and show the evidence based on it. Although oversized, Stabilitycoins are held from an individual phase to a single phase. Stable coins with many stocks are also going down as the stock continues to fall lower than initially. The reason for the depreciation is that issuers oppose the equivalent of a fixed management fee to support demand and share risk with consumers to avoid disruption. We focus on the stock market as a whole, as recent consensus and banking has made people question the potential for low collateral stability.

Stable financial management of stable financial institutions is an important part of running a treasury business, but unlike businesses, stable financial institutions can reduce debt (not fixed payment). Similar to countries that pay down debt through inflation. Stablecoins are similar to Exchange Traded Contracts (CoCos), which simply divide the risk between the fair shareholder and the debt holder. However, unlike CoCos, risk sharing is based on investment rather than the exchange of fixed income into capital, which is determined by the provider without prior decision.

Securities were the subject of much controversy after tech giant Facebook and its partners announced their own securities, Libra (now "Diem") in June 2019. Using existing market players, global technology companies or financial companies can increase their profits. In order to better understand the advantages of good cooperation in stable coin business, we offer different platforms of different network advantages. Bigger network problems are associated with lower costs. This is because strong network interference allows the platform to retain revenue faster when total revenue is received, and higher costs allow the platform to maintain a higher level of resources for risk. . .

Stablecoin services sponsored by companies with global clients have been overseen by regulators due to concerns about monopoly power with their potential for large-scale use. In our model, the two combined forces determine the share of the financial services platform. With the effects of a strong network, the platform can earn more money from users through cost sharing or risk sharing, but as a single user is not shared. The network is active, they need more to meet the token needs by reducing the cost and stable tokens. external effects. In equilibrium, two forces are equal. As a result, the distribution of income is stable and consumers are less likely to be affected by network disruptions.

The sheer size of the payments-driven data exchange provides the driving force for the digital platform to create its own stable value. According to Parlor (2020), data models are used by commercial products. If the return value is constant, the value of the fixed value held by the user determines the volume of exchange and the value of the data stored. Data helps improve platform product performance, allow users to access electronic devices received by tokens, and data can help improve platform productivity, allowing users to access electronic devices received by tokens held by users. A feedback loop appears. The market is creating more data to improve the platform and lead to higher demand for tokens and greater market share. Thus, the data grows exponentially over time. The platform affects the balance of stored and archived data.

Crypto Shadow Banking in Decentralized Finance

Blockchain technology facilitates the exchange of valuable assets on the distributed database, so that a transaction through an intermediary will not be necessary. Decentralization avoids the significant costs of a brokerage house (Philippon, 2015). According to the blockchain protocol, decentralization can improve efficiency by eliminating dysfunction when achieving scalability (John, Rivera, Saleh, 2020). Decentralized finance (“DeFi”) offers an alternative to traditional blockchain-based financial services such as banks, brokers and stock exchanges (Lehar, Parlor, 2021). It also follows the blockchain independent smart contract (implementation of programmable currency coding) (Halaburda, 2018).

This new financial development requires a profitable blockchain. The payment method used to maintain a fixed price for at least meeting time (i.e., the time needed to establish a business agreement). However, most cryptocurrencies are volatile. The benefits of the platform money are not supported and exchanged according to the equipment and needs available in the hosting platform (Cong, Li, Wang, 2019).

Stablecoins has been reported as a copy of the fiat currency based blockchain. Total market value over $ 100 billion. In May 2021 alone, $ 766 billion in fixed coins were traded. Senders can be businesses or organizations. For example, Facebook or an organization run by the developers of Diem. It can also be an online process (like MakerDAO, announced by Dai) that allows rules to be changed based on user preferences. Stablecoins are backed by the promoter of the exchange, and the safety of their value is maintained by the open market trader, for example, by the exchange for stable and full redemption requests (Bullmann, Klemm, Pinna, 2019). A product list records the ownership and exchange of fixed parts, but the evidence still relies on traditional inspections (Calle, Zalles, 2019).

Stablecoins are a combination of financial division and real business. The volatility of first generation cryptocurrencies such as Bitcoin and Ethereum limits their application in the real world. Fixed returns are designed to provide a stable exchange rate against a standard currency model and can cause the broker to trade real goods, services and assets on a blockchain basis. Stablecoins are also important to the cryptocurrency community. A trader's activities involve a lot of rebalancing of stability coins and volatile cryptocurrencies. Cryptocurrencies have become a new asset with a total market value of around $ 1.5 trillion, of which Bitcoin is worth around $ 700 billion. It is estimated that 50-60% of Bitcoin's trading volume is in USDT, a stable currency issued by Tether (J.P. Morgan Global Research, 2021).


Figure 1

Cryptocurrency shadow bank. This shows that the two models of a bond are stable. As shown in figure 1, in panel A the platform has problems with the stability of the pieces backed by bars. Excess savings or related events are intended for those managed token holders who have control over them (for example, managing platform rules). When savings are invested in risky assets, the lost capital is absorbed by the stock market. As long as the bond is oversized, its value does not affect. In Group B, the stable part was supported by both the owner user and the storage platform. If lending rates fall and consumers are unable to meet their needs, the platform reserves products and uses the income (and its own reserves) to buy back stable loans from the secondary market.

When fixed income securities are important, there is no law or regulation. Unlike banks, issuers of securities do not have to hold a redemption at par. Since the bulk of savings are invested in risky assets, many fear that large fixed assets will "blow up the pot" and lead to a financial crisis (Massad, 2021). ). These concerns were inspired by the recent shift in the financial market from fixed assets to liquid assets during globalization 2007-2008. In fact, the creation of stablecoins is essentially a new form of shadow market, illegal and secure trading.

Special investments are generally risky, Panel A in Figure 1 shows the formation of stable coins that contain OTC assets. The equity advisor minimizes the change in the value of the reserve. Stakeholders are called management (or "second class") tokens and have the right to vote (i.e. manage) changes in rules and regulations for the payment of income, from exchange rates to costs fixed. Just as people can increase their income with advertising tokens, they can increase their capital with advertising management tokens.

Stablecoin issuers always place leveraged bets on the value of their assets. Just as banks use new deposits for lending and trading in securities (for example to generate internal returns), advisers can be improved by offering new fixed funds to help finance the purchase of assets. Unlike banks that commit to repay deposits at a face-to-face rate, stable businesses can invest heavily.

Panel B in Figure 1 shows a complex structure similar to that used by MakerDAO. Consumers use cryptocurrencies and other assets as liability for new stablecoins, but they must comply with the negative (when interest is required). Users can exchange coins permanently and then send them to the market, but must meet the requirements. If the stock goes down and the consumer cannot control the income, it affects the stock at the seller, making the stock and the money to buy back (and trade) stable funds created for those users. If liquidation of the collateral does not generate sufficient income, the stability coin issuer's reserves can be used to pay the costs of redeeming the stability coin.

The structure of group B in Figure 1 is widely available in traditional shadow libraries. The bank implemented the Group B model in Figure 1, which is very common in shadow banks. Banks create channels (specialist schools) that turn capital investments into debt and equity, while providing guarantees. When these channels emerge, banks will face their downfall (Acharya, Schnabl and Suarez, 2013). Stable coins are like the spending (essential) part of a channel, and in Figure 1, the stable users and the group B users are banks and consumers respectively. In Figure 1, the advisor and the user of the fixed bond are linked to the bank and the channel, respectively. Stablecoin issuers promise to return fixed coins with special bonuses similar to bank guarantees.

The difference between the two models in Figure 1 in terms of shadow companies is usually from group A to group B, the stable seller negotiates the risk from the balance sheet to the site (e.g. user), therefore fixed assets are personal property of the user. and the transmitter is reserved, supported by everyone. Compared to the simple structure of Group A in Figure 1, this double loan does not require increased security. Indeed, both the private consumer and the collector can be risky and potentially associated with their costs. The results are encrypted.


First generation cryptocurrencies such as Bitcoin and Ethereum were created to be the medium of exchange, but exchange rates affected this activity. With the rapid development of financial management, many stable services have sprung up to meet the human demand for stable blockchain-based payment methods. Stablecoins are provided by private equity firms to maintain a stable value and promise to repay the fixed amount with the assets they hold. However, as these defenders increase their income more than overall health, there is conflict between defenders and people Spending money on emergencies, making room for better health care. Additionally, mature internet marketing companies (such as Facebook) are planning to build their own stablecoins. The recovery process after these initiatives is more complex. Especially since the operating systems allow the platform to collect the information exchanged and the resulting benefits.

A lot of things were enjoyed by admins and pundits, but so far no one has been able to submit the perfect solution, which isn't strange. In this article, we have documented this difference and established a good model of stable financial management. The equation of this model is that when the advisor maintains a sufficiently high amount, the value of the fixed deposit becomes stable, and when the reserve value is lower than the initial value, the value of the fixed deposit becomes higher depending on the cost. of the transmitter. Inexpensive marketing can be avoided by exchanging special funds to allow consultants to share with stable clients.

The distribution state is bimodal and greater than the initial amortization, the entry keeps the value of the token stable, thus increasing the demand for tokens, allowing the entry to write income and increase the coverage of assurance. When negative pressure uses the advisor to maintain below the initial value of the investment, this virtuous cycle becomes a negative cycle. As token prices fluctuate and consumer demand for tokens declines, commentators generate revenue and token operating income by selling tokens on low noise open trades, slowing device rebuilding. storage and makes the equipment unstable. This vicious circle can be broken by announcing tokens (Management Tokens) to be added to the store. Issuing shares requires the use of a token to eliminate arbitrage.

Our model provides a framework for evaluating recommendations. We show that if capital regulation is able to improve overall health, the legitimate commitment to total security can harm health. Our framework can also be used to identify support for stable plans led by large platform companies. We prove that strong network interference can increase the security of token transactions, making these platform companies producers of stable funds. In addition, the introduction of stable funds can help boost business and use the data exchange to increase the profitability of the platform. However, the increase in production data could cause the stability parts to weaken as the platform supports the business and emits more stability per unit area.


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