The Feasibility of MBSs as Decentralized Autonomous Organizations

Timothy Dombrowski and V. Carlos Slawson

Papers from arXiv.org

Abstract: Can the general structure of a mortgage-backed security (MBS) contract be programmatically represented through the use of decentralized autonomous organizations (DAOs)? Such an approach could allow for the portfolio of loans to be managed by investors in a trustless and transparent way. The focus and scope of this paper is to explore the potential for applying the tools of modern fintech, such as asset tokenization, smart contracts, and DAOs, to reconstruct traditional structured products that have a greater degree of transparency and traceability. MBS investors face considerable value uncertainty as time increases between the actual occurrence (or non-occurrence) of cash flows and subsequent reporting. Given that an MBS is a financial contract, it should be expressible logically using the Algorithmic Contract Types Unified Standards (ACTUS). Since each underlying mortgage in an MBS derives its cash flows in a prescribed way over the life of the contract, implementation on a public blockchain could enable real-time ratings systems, improving market efficiency. We explore the potential for creating formal algorithmic designs of MBS-DAOs that incorporate individual mortgages, the underlying real estate assets (collateral), and any loan guarantees.

Date: 2025-07, Revised 2025-07
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2507.05439 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:2507.05439

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().