Volume 2, Number 4 (2021) Crypto-economics, Decentralized Finance (DeFi), and other monetary digital alternatives (1)

Crypto-economics is a catchy term for an interdisciplinary, emergent study area that combines ideas and concepts from economics, game theory, and related disciplines in the design and analysis of peer-to-peer, cryptographic systems in which some form of exchange of value takes place. The origins of such systems can be traced to Bitcoin in 2009 and following “alt-coins”, but the emergence of programmable protocols in the form of “smart contracts”, starting with the Ethereum network, encouraged entrepreneurs and innovators to devise and deploy a diversity of crypto-economic mechanisms. These started with “tokens”, including fungible (e.g. ERC20) and non-fungible or collectibles (e.g. ERC721), but that now spans to a variety of organizations and models that have come to be known as “decentralized finance” (DeFi). A critical development in DeFi was the launch of MakerDAO in 2014, and its related stable-coin DAI, a decentralized alternative to previous attempts to attain stable tokens. The launch in 2018 of Uniswap was a cornerstone for moving users to decentralized exchanges, and a collection of innovations followed. The recent inception of Ethereum 2.0 and the emergence of other smart contract blockchain networks that target DeFi suggest that the field would expand with a high pace of innovation (including of course failures). The above-described landscape has received limited attention from scholarly research, with most of the literature focusing on the analysis of prices, volatility, and properties using the same methods for non-blockchain-based assets and services. This special issue aims at fostering discussion, inquiry, and thorough analysis of crypto-economics, decentralized finance, and other digital monetary alternatives. That is because crypto-economics and decentralized finance are not the only innovations with the potential to disrupt the existing monetary arrangements. Experimentations with and proposals for “stable-coins,” as mentioned above, but also for “Central Bank Digital Currencies” (CBDC).



The Curse of Central Bank Digital Cash
Fernando Ulrich and Leonidas Zelmanovitz