Tovanich, Natkamon and Kassoul, Myriam and Weidenholzer, Simon and Prat, Julien (2023) Contagion in Decentralized Lending Protocols: A Case Study of Compound. In: 2023 Workshop on Decentralized Finance and Security (DeFi ’23),, 2023-11-30 - 2023-11-30, Copenhagen, Denmark. (In Press)
Tovanich, Natkamon and Kassoul, Myriam and Weidenholzer, Simon and Prat, Julien (2023) Contagion in Decentralized Lending Protocols: A Case Study of Compound. In: 2023 Workshop on Decentralized Finance and Security (DeFi ’23),, 2023-11-30 - 2023-11-30, Copenhagen, Denmark. (In Press)
Tovanich, Natkamon and Kassoul, Myriam and Weidenholzer, Simon and Prat, Julien (2023) Contagion in Decentralized Lending Protocols: A Case Study of Compound. In: 2023 Workshop on Decentralized Finance and Security (DeFi ’23),, 2023-11-30 - 2023-11-30, Copenhagen, Denmark. (In Press)
Abstract
We study financial contagion in Compound V2, a decentralized lending protocol deployed on the Ethereum blockchain.We explain how to construct the balance sheets of Compound’s liquidity pools and use our methodology to characterize the financial network. Our analysis reveals that most users either borrow stablecoins or engage in liquidity mining. We then study the robustness of Compound v2 through a series of stress tests, identifying the pools that are most likely to set off a cascade of defaults.
| Item Type: | Conference or Workshop Item (Paper) |
|---|---|
| Uncontrolled Keywords: | systemic risk; decentralized finance; financial contagion; financial network; stress test |
| Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
| SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
| Depositing User: | Unnamed user with email elements@essex.ac.uk |
| Date Deposited: | 20 Sep 2023 12:41 |
| Last Modified: | 30 Oct 2024 21:24 |
| URI: | http://repository.essex.ac.uk/id/eprint/36432 |
Available files
Filename: Contagion_ACM_DeFi_2023.pdf
Licence: Creative Commons: Attribution 4.0