Author: Yu, Jiahui
Title: Characterizing Ethereum DeFi applications
Advisors: Luo, Xiapu (COMP)
Degree: M.Sc.
Year: 2021
Subject: Finance -- Technological innovations
Financial institutions -- Deregulation
Hong Kong Polytechnic University -- Dissertations
Department: Department of Computing
Pages: 93 pages : color illustrations
Language: English
Abstract: In January 2014, Vitalik Buterin announced the official Ethereum project at the Miami Conference. Although users are skeptical about the security of Ethereum due to the DAO attack, with the gradual improvement of technology, the ecology of Ethereum has gradually enriched. Ethereum smart contracts provide developers with a good development environment. Dappradar [44], a website which explore and analyze the blockchain decentralized applications (DApps), divides DApps on Ethereum into exchanges, games, social, collectibles, etc. Whether it is ranked by daily users or daily volume, most of the top ones are DeFi-related applications. An entirely new financial system powered by blockchain, Decentralized Finance (DeFi), is booming. In just a few months, the total value locked in DeFi has grown from approximately US$15 billion to a staggering US$66 billion. The trading volume of the Decentralized Exchange (DEX) also hit a record high, with monthly trading volume exceeding US$50 billion. New projects are emerging almost every day. With the rapid development of DeFi, people's interest in these various applications also grows. To help people to have a deeper understanding of decentralized finance applications, we firstly divide the DeFi Applications on Ethereum into five categories based on the main service DApps provide to users, including Stablecoins, Borrowing And Lending, Decentralized Exchanges, Derivatives, Portfolio Management. And then we perform analysis on two largest applications of each categories from two aspects, one is qualitative analysis through which we can understand the internals of DeFi Applications, the other one is transaction analysis through which we can understand how people use DeFi Applications through Transaction Analysis. Through the process of analysis, we found that currently, governance rights of most applications have not been decentralized. People prefer to the DeFi applications with lower product risk, such as Stablecoins and Decentralized Exchanges. And when the product needs are the same, users tend to prefer apps that launch earlier. We also find degree distribution of the single-application transaction network also present the characteristics of the power-law distribution. Lower-risk DeFi applications have bigger size of transaction networks, with the stronger homogeneity and the ability to resist deliberate attacks.
Rights: All rights reserved
Access: restricted access

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