Fabian Schär

University of Basel | UNIBAS · Distributed Ledger Technology and Fintech

In this article, we give a short introduction to cryptocurrencies and blockchain technology. The focus of the introduction is on Bitcoin, but many elements are shared by other blockchain implementations and alternative cryptoassets. The article covers the original idea and motivation, the mode of operation and possible applications of cryptocurrenc...

We characterize various currencies according to their control structure, focusing on cryptocurrencies such as Bitcoin and government-issued fiat money. We then argue that there is a large unmet demand for a liquid asset that allows households and firms to save outside of the private financial sector. Central banks could offer such an asset by simpl...

Full Paper on SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3443382 Abstract: In this chapter, we present tokenization of equity crowdfunding on a Blockchain as a possible approach to ease access to capital for startups. We propose a categorization of token standards into UTXO-based, layer-based and smart contract-based tokens. In a s...

In this article, we introduce a formal classification framework, in an attempt to untangle the various meanings of the term fork. We show that Blockchain forks can be processor protocol-based and emerge unintentionally or deliberately. We then proceed with a sub-classification of protocol-based forks and analyze their persistency. We further show h...

This paper explores the Decentralized Finance (DeFi) ecosystem. We examine how DeFi is emerging on top of the public Ethereum smart contract platform, compare it to the centralized architecture of traditional financial markets and highlight opportunities and potential risks of this ecosystem. We propose a multi-layered framework to analyze the impl...

In urban economics, transportation costs are a key determinant of land value. However, in virtual worlds, these costs are generally limited by the users’ ability to teleport. Drawing from urban and attention economic literature, we propose a theoretical model microfounded on user behavior. The model suggests that the relative value of land parcels...

This article proposes a framework to assess the factual decentralization of blockchain-based financial infrastructure, commonly referred to as ‘decentralized finance’ (DeFi). It discusses various centralization vectors along the DeFi architecture layers from a technological and legal point of view. Distinguishing between endogenous and inherited ce...

In this paper we analyze constant product market makers (CPMMs). We formalize the liquidity providers' profitability conditions and introduce a concept we call the profitability frontier in the xyk-space. We study the effect of mint and burn fees on the profitability frontier, consider various pool types, and compile a large data set from all Unisw...

In this paper, we propose a fully decentralized and smart contract-based insurance protocol. We identify various issues in the Decentralized Finance (DeFi) insurance context and propose a solution to overcome these shortcomings. We introduce an economic model that allows for risk transfer without any external dependencies or centralized intermediar...

How to empower people and communities with user-centric data ownership, transparent and accountable algorithms, and secure digital transaction systems. Data is now central to the economy, government, and health systems—so why are data and the AI systems that interpret the data in the hands of so few people? Building the New Economy calls for us to...

As blockchain technology is maturing to be confidently used in practice, its applications are becoming evident and, correspondingly, more blockchain research is being published, also extending to more domains than before. To date, scientific research in the field has predominantly focused on subject areas such as finance, computer science, and engi...

The term decentralized finance (DeFi) refers to an alternative financial infrastructure built on top of the Ethereum blockchain. DeFi uses smart contracts to create protocols that replicate existing financial services in a more open, interoperable, and transparent way. This article highlights opportunities and potential risks of the DeFi ecosystem....

In this chapter, we present tokenization of equity crowdfunding on a Blockchain as a possible approach to ease access to capital for startups. We propose a categorization of token standards into UTXO-based, layer-based and smart contract-based tokens. In a second step, we analyze the advantages that tokenization can bring, such as cryptographically...

We analyze locational preferences of investors in the metaverse. The setting allows us to compile a unique data set with parcel- and investor-specific observations. We find strong evidence that location matters even in a virtual world with negligible transportation costs. Locational preferences come in two distinct forms. Investors are willing to p...

In this paper, we analyze various Decentralized Finance (DeFi) protocols in terms of their token distributions. We propose an iterative mapping process that allows us to split aggregate token holdings from custodial and escrow contracts and assign them to their economic beneficiaries. This method accounts for liquidity-, lending-, and staking-pools...

An introduction to cryptocurrencies and blockchain technology; a guide for practitioners and students. Bitcoin and blockchain enable the ownership of virtual property without the need for a central authority. Additionally, Bitcoin and other cryptocurrencies make up an entirely new class of assets that have the potential for fundamental change in t...

In this paper, we propose an autonomous vending machine that is governed by a public Blockchain and smart contracts platform. Set up as a decentralized autonomous organization, it serves as an open marketplace for physical goods, where anyone can buy and/or sell objects. We propose a basic architecture for the machine, analyze pricing and fee mecha...

Blockchain forks can have severe economic implications, sow uncertainty and undermine trust. In this paper, we introduce a formal framework to study the emergence, persistency and economic consequences of blockchain forks. We argue that blockchain forks can be process- or protocol-based and emerge unintentionally or deliberately. We then proceed wi...

This paper provides an overview on stablecoins and introduces a novel terminology to help better identify stablecoins with truly disruptive potential. It provides a compact definition for stablecoins, identifying the unique features that make them distinct from previously known payment systems. Furthermore, it surveys the different use cases for st...

An ex ante analysis of the 2020 Bitcoin halving. More information and video of the event can be found here: https://cvj.ch/en/hot-topics/crypto-trends-2020/bitcoin-halving-the-view-from-crypto-valley/

Proof-of-work cryptocurrencies are heavily criticized for the alleged inefficiency of their mining mechanism. However, critics fail to distinguish between the resources that are used to secure the blockchain and those that are wasted. In this paper, we introduce a simple mining model and use this model to analyze the consensus protocol's efficiency...

Proof-of-work cryptocurrencies are heavily criticized for the alleged inefficiency of their mining mechanism. However, critics fail to distinguish between the resources that are used to secure the blockchain and those that are wasted. In this paper, we introduce a simple mining model and use this model to analyze the consensus protocol's efficiency...

In diesem interdisziplinären Beitrag betrachten wir die Funktionsweise und die besonderen Charakteristika der Blockchain-Technologie und Smart Contracts. Wir analysieren deren Eigenschaften, untersuchen wie sich diese auf die betriebswirtschaftliche Anwendbarkeit auswirken und zeigen Potenziale und Grenzen der Technologie im Kontext der Prozessauto...

Blockchain is a very interesting and promising technology. It is, however, also a very complex and highly interdisciplinary one. The underlying concepts are a mixture of computer science, cryptography, and economics. To truly grasp the technology and its potential, one needs to have a background in all three of these disciplines. To make matters wo...

In this article we describe how Blockchain technology can be used to secure academic credentials. We provide insights from a joint project between the University of Basel’s Center for Innovative Finance and BlockFactory Ltd, and show some considerations that went into the concepts as well as an evaluation on how these Blockchain diplomas perform in...

A stablecoin classification framework. https://voxeu.org/content/economics-fintech-and-digital-currencies

This study, performed by SUSI Partners AG in cooperation with the Center for Innovative Finance of the University of Basel, provides an overview of the applications of blockchain technology in the field of renewable energies. We show that the use of blockchain technology can generate new and promising approaches for solutions to the current challen...

Die Blockchain wird als Innovation des Jahrzehnts gehandelt und hat das Potential die Welt auf ähnliche Weise zu verändern, wie dies das Aufkommen des Internets tat. Dieses Buch beinhaltet sämtliche Informationen, die zum Verständnis dieser faszinierenden Technologie benötigt werden. Der interdisziplinäre Blickwinkel und die fachliche Vollständig...

Cash is accused of three sins: First, cash is inefficient and costly to use, and society would be better off without it. Second, it promotes crime, and facilitates money laundering and tax evasion. Third, it makes negative nominal interest rates infeasible. In certain situations, this may hinder central banks from implementing optimal monetary poli...