Decentralization illusion in DeFi: Evidence from MakerDAO
Xiaotong Sun,
Charalampos Stasinakis and
Georgios Sermpinis
Papers from arXiv.org
Abstract:
Decentralized Autonomous Organization (DAO) is very popular in Decentralized Finance (DeFi) applications as it provides a decentralized governance solution through blockchain. We analyze the governance characteristics in the relevant Maker protocol and its stablecoin Dai (DAI) and governance token Maker (MKR). To achieve that, we establish several measurements of centralized governance. Our empirical analysis investigates the effect of centralized governance over a series of factors related to MKR, DAI and Ethereum, such as financial, transaction, exchange, network and twitter sentiment indicators. Our results show that governance centralization influences both the Maker protocol and Ethereum blockchain. The main implication of this study is that centralized governance in MakerDAO very much exists, while DeFi investors face a trade-off between efficiency and decentralization. This further contributes to the contemporary debate on whether DeFi can be truly decentralized.
Date: 2022-03
New Economics Papers: this item is included in nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://arxiv.org/pdf/2203.16612 Latest version (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:arx:papers:2203.16612
Access Statistics for this paper
More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().