Where Do DeFi Stablecoins Go? A Closer Look at What DeFi Composability Really Means

Kanis Saengchote

No 156, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: One of the benefits of decentralized finance (DeFi) – an alternative financial system built on blockchain – is composability, which means the system's building blocks (tokens) can freely interact with one another to form new services. One example is stablecoin, a token with fixed exchange rate, which is backed by token collaterals. While stablecoins can be used to facilitate payments and exchanges, in DeFi they can be used to earn returns (“yield farming†), potentially multiplicatively. We use transaction-level blockchain data to analyze a stablecoin's flows between protocols and provide suggestive evidence of DeFi yield-chasing behavior. We shed light on what DeFi total value locked might really measure and highlight the complexity in DeFi analysis and market surveillance.

Keywords: DeFi; Stablecoin; Total Value Locked; Yield Farming; Systemic Risk (search for similar items in EconPapers)
JEL-codes: E00 G00 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2021-07
New Economics Papers: this item is included in nep-ban, nep-mon and nep-pay
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.pier.or.th/files/dp/pier_dp_156.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pui:dpaper:156

Ordering information: This working paper can be ordered from
https://www.pier.or.th/en/dp/156/

Access Statistics for this paper

More papers in PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ().