This episode discusses the costs of liquidity provision at Decentralized Exchanges. Ciamac Moallemi (Columbia University) explains that liquidity providers at a Decentralized Exchange always face a loss relative to an asset portfolio that actively rebalances to match the asset weighting of the Decentralized Exchange at all times. This loss, known as Loss-Versus-Rebalancing (LVR, pronounced 'Lever'), is the primary cost of liquidity provision. Design refinements to mitigate this cost are discussed.

Ava Labs x CBER Ep 5: Loss-Versus-Rebalancing (LVR) at Decentralized Exchanges

This episode discusses lending platforms on blockchains. Thomas Rivera (McGill University) and Quentin Vandeweyer (University of Chicago) explain that lending platforms generate sub-optimal welfare due to under-utilization of funds that are lent to the platform. To provide more context, lending platforms are specified in such a way that the level of borrowing (relative to lending) necessarily fluctuates with market conditions, resulting in instances where borrowing is significantly below lending. Importantly, when borrowing is significantly below lending, the total interest accrued from borrowers (relative to lending volume) is necessarily low, yielding low interest rates for lenders and thereby discouraging lending. Potential improvements for lending platforms are discussed.

Ava Labs x CBER Ep 4: Economics of Lending Platforms

This episode discusses a phenomenon known as Just-In-Time Liquidity at Decentralized Exchanges. Agostino Capponi (Columbia University) explains that, while this phenomenon is generally viewed as positive for liquidity demanders, it can actually undermine liquidity provision. More specifically, JIT liquidity providers can pick-and-choose the best trades, which reduces the incentive for passive liquidity providers to offer liquidity. The consequent reduction in passive liquidity can lead to lower overall liquidity.

Ava Labs x CBER Ep 3: Just-In-Time Liquidity At Decentralized Exchanges

Brett Falk (University of Pennsylvania) and Gerry Tsoukalas (Boston University) discuss voting protocols in Decentralized Autonomous Organizations. Brett Falk (University of Pennsylvania) and Gerry Tsoukalas (Boston University) highlight weaknesses in existing voting protocols. An important point is that many voting protocols weight votes based on token holdings but a voter’s token holdings does not, in general, reflect the level of information that the voter has with regard to a voting proposal. The consequence of this misalignment between a voter’s weight and a voter’s information is suboptimal welfare outcomes.

Ava Labs x CBER Ep 2: Governance of Decentralized Autonomous Organizations

Lewis Cohen (DLx Law) discusses whether cryptoassets are securities from the perspective of US law. Lewis Cohen (DLx Law) explains the relevant US securities laws and then highlights how cryptoassets can differ from traditional securities. A key point is that many cryptoassets do not confer rights in the manner of traditional securities, instead conferring abilities. Cryptoassets thus might require a novel regulatory framework.

Ava Labs x CBER Ep 1: Are Cryptoassets Securities?

The Crypto and Blockchain Economic Research (CBER) Forum and Owl Explains are delighted to present a transformative podcast series, "Crafting the Crypto Economy." This series features leading faculty from renowned global universities providing economic guidance regarding optimal design of various blockchain ecosystem elements. Particular focus will be given to proper economic design of tokens and of decentralized applications. This series is in collaboration with Columbia University’s Briger Family Digital Finance Lab, Columbia University’s Center for Digital Finance and Technologies, Boston University’s Digital Business Institute at the Questrom School of Business, École polytechnique and the University of Toronto Rotman School of Management's FinHub.

Owl Explains x CBER