Working with the large FIRN member institutions we have developed a virtual seminar series where all FIRN members can participate. The seminars will be via zoom and will be about an hour long, comprising presentation followed by moderated Q&A.
In collaboration with UTS, FIRN invites you to a virtual seminar presented by Joe Zhong, University of Melbourne
Paper Title: Trust in DeFi: An Empirical Study of the Decentralized Exchange
Abstract: We provide empirical evidence that the decentralized cryptocurrency exchange helps reveal the consensus on the value of the cryptocurrency. By examining how investors on Binance (the largest centralized cryptocurrency exchange) trade in response to prices on Binance and Uniswap (the largest decentralized cryptocurrency exchange), we find that Uniswap liquidity provision exerts a positive impact on Binance investor trading towards the Uniswap price. We do not find Binance liquidity provision shares a similar effect. Using the launch of the “yield-farming” program as a quasi-natural experiment, we establish the causal impact of Uniswap liquidity provision on trading. Our results reflect that Uniswap, a decentralized exchange built on blockchain and smart contracts, can gain investors’ trust in its ability to aggregate the consensus of the cryptocurrency’s value. Our findings shed light that the blockchain and smart contracts powered decentralized infrastructure has the potential to provide an alternative solution to cases where a consensus underwritten by a credible central party, e.g., a centralized exchange, is not feasible or too costly to obtain.
Moderated by: Kenny Phua, University of Technology Sydney
All FIRN members are welcome to this event. Please register your interest and you will be sent an email the day before with details of how to obtain the zoom code.
