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Abstract. This paper describes the first implementation of Decentralized Autonomous Organization (DAO) code to automate organizational governance and decision-making. The code can be used by individuals working together collaboratively outside of a traditional corporate form. It can also be used by a registered corporate entity to automate formal governance rules contained in corporate bylaws or imposed by law. First the DAO concept is described, then minority rights is discussed, and a solution to a “robbing the minority” attack vector is proposed. Finally, a practical implementation of a first generation DAO entity is provided using smart contracts written in Solidity on the Ethereum blockchain. 1. Introduction Corporate entities of all kinds are governed by rules that describe permitted and proscribed conduct. These rules may exist as private contracts (like bylaws or shareholder agreements) between corporate owners. They may also be imposed by law in addition to or in the absence o...

20 [ ] One pager Current state of affairs At the moment, 20squares revolves around the use of a software implementation of Compositional Game Theory. This software allows for fast modelling and subsequent analytics. In this way, we are able to provide a platform for strategic analysis and testing, that can be used to discover, prove and correct economical properties of financial software and protocols. Our implementation is open source, but its usage requires some training. As a consequence, our main line of business at the moment is in consulting. We work with interested projects that are looking for formal reassurances that what they are doing makes economical sense. This includes: • DeFi platforms, interested in the financial stability of their protocols; • Marketplaces, interested in economically optimized solutions for revenue extraction; • Fundamental infrastructure designers, interested in maximizing the sustainability and welfare of its users; • MEV searchers, interested in ana...

Demand for blockchains such as Bitcoin and Ethereum is far larger than supply, necessitating a mechanism that selects a subset of transactions to include “on-chain” from the pool of all pending transactions. This paper investigates the problem of designing a blockchain transaction fee mechanism through the lens of mechanism design. We introduce two new forms of incentive-compatibility that capture some of the idiosyncrasies of the blockchain setting, one (MMIC) that protects against deviations by profit-maximizing miners and one (OCA-proofness) that protects against off-chain collusion between miners and users. This study is immediately applicable to a recent (August 5, 2021) and major change to Ethereum’s transaction fee mechanism, based on a proposal called “EIP-1559.” Historically, Ethereum’s transaction fee mechanism was a first-price (pay-as-bid) auction. EIP-1559 suggested making several tightly coupled changes, including the introduction of variable-size blocks, a history-depend...

In the past decades, privately owned payment systems (e.g., PayPal, M-Pesa, Alipay, and Square) have gained widespread popularity. Recently, various cryptocurrencies further caused a fundamental reorientation of domestic and international monetary and payment technologies, as well as of policies and regulatory frameworks governing payment systems (Brunnermeier, James, and Landau, 2019; Adrian and Mancini-Griffoli, 2019; Cong, Li, and Wang, 2021a). Many countries around the globe react to these trends by actively researching on Central Bank Digital Currencies (CBDCs, see, e.g., Bech and Garratt, 2017; Duffie, 2021; Duffie and Gleeson, 2021), as revealed by the sharp rise in the number of central banks in the process of developing their own digital currencies (Boar, Holden, and Wadsworth, 2020; Boar and Wehrli, 2021).1 Due to their potential to be safer, cheaper more efficient, interoperable, and versatile, digital currencies have the potential to challenge or even replace traditional fi...

Capital flows can bring substantial benefits for countries but also carry risks. They help smooth consumption and finance investment, diversify risks, and contribute to a more efficient allocation of resources. They can also foster economic growth by transferring technology and managerial skills, stimulating financial sector development, and generating incentives for better governance and stronger macroeconomic policies. At the same time, large and volatile flows can pose macroeconomic and financial stability risks, which can be magnified by gaps in a country’s financial and institutional infrastructure. To mitigate such risks while retaining policy autonomy, many IMF member countries, particularly emerging market and developing economies with less-developed financial markets, maintain some form of restrictions on capital flows. Capital flow management measures (CFMs) can be part of a broader policy toolkit to help countries reap the benefits of capital flows while managing the associa...

How societies organise their monetary systems is a consequence of the interaction of ideas (e.g. should a central bank target price stability?) with technology (e.g. how good are we at issuing money that is hard to counterfeit?). This interaction is dynamic: improvements in technology drive how we think about money and, vice versa, changes in our ideas about money lead to developing new monetary technologies. Also, it is a punctuated interaction: periods of rapid change are intersected among long years of stability. Right now, we are living in one of those times of quick transformation. The internet, advanced cryptography, and fast computational power mean that it is well within the realm of feasibility to completely change our financial system. And these technologies have led the private sector to introduce new ideas in the form of digital currencies, from bitcoin to Facebook’s diem. In response to this technological and private sector pressure, central banks are considering a move fr...

Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour. https://www.ft.com/content/b4fa13c7-7b4b-469b-8401-638c85e79289 The boundaries between cryptocurrencies and traditional asset classes are blurring ever further, as established Wall Street players make trading digital assets part of their main business — and companies native to bitcoin push into mainstream markets. The arrival of institutional investors into the $1.3tn digital asset market has meant the influence of big banks and professional traders has grown. As a result, the relationship between the price of mainstream assets, such as stocks and bonds, and crypto has tightened. But, so far, the majority of the...