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All Falls Down

With Allen Farrington. [PDF link]

A discussion of the mechanics behind Terra, the context and history of stablecoins, and a play by play account of the Terra collapse.

On Impossible Things Before Breakfast

With Ross Stevens and Allen Farrington. Available at

A post-mortem on Terra, a pre-mortem on DeFi, and a glimpse of the madness to come

Letter to Michael Reagan of the EPA

With Michael Saylor and Darin Feinstein. Available at the Bitcoin Mining Council

In this letter to the EPA, signed by the CEOs of many of the largest financial institutions active in the Bitcoin industry, we respond to at a letter signed by Rep. Huffman and 22 other members of Congress to the EPA regarding crypto mining.

How Much Energy Does Bitcoin Actually Consume?

Published in Crypto: The Insights You Need from Harvard Business Review (HBR Insights Series)

A discussion of Bitcoin’s energy demands in context.

Bitcoin Net Zero

With Ross Stevens and NYDIG. Available at

In 1971, the world’s major economies lost their final tether to gold, entering a fully fiat monetary standard. Under this fiat model, inflation has been structurally higher, financial crises no less ruinous, and real growth no higher than under the gold standard. Today, inflation and monetary instability interfere with ability of billions of individuals worldwide to store their wealth. Bitcoin offers the world an alternative – a sound monetary system outside the control of governments and central banks. Our report considers the merit of Proof of Work, quantifies Bitcoin’s resource costs, and examines pathways towards mitigating the externalities associated with mining.

Decentralized Finance: The Future of Crypto and Open Finance?

Chapter 13 in Linda Jeng’s Open Banking, OUP (2022)

A comparison between open banking and DeFi.

DeFi Protocol Risks: the Paradox of DeFi

With Linda Jeng. Chapter for “Regtech, Suptech and Beyond: Innovation and Technology in Financial Services,” editors, Coen, Bill and Maurice, Diane. RiskBooks – forthcoming 3Q 2021. Available on SSRN

This article discusses the drivers behind the risks inherent in DeFi. Many of the risks described stem from the decentralized nature of blockchains. The goal of automating the delivery of financial services and reducing human dependencies also has the congruent effect of reducing oversight and control. Disintermediating traditional intermediaries reduces high fees and entry friction, but also creates new opportunities for new types of intermediaries. This article discusses some of the new types of risks introduced by DeFi that are inherent to blockchain systems along with traditional types of financial risks in DeFi that manifest in new ways: (i) interconnections with the traditional financial system, (ii) operational risks stemming from underlying blockchains, (iii) smart contract-based vulnerabilities, (iv) other governance and regulatory risks, and (v) scalability challenges.

In an effort to remove humans and automate as much as possible through smart contracts, DeFi has introduced or amplified these risks. The growth of DeFi will depend on its ability to navigate and build compatibility with traditional finance and on how laws and regulations respond. Perhaps the biggest challenge of all is that the DeFi ecosystem continues to grow while its underlying base layer (public infrastructure such as Bitcoin or Ethereum) faces growing pains. As DeFi grows in importance and becomes more mainstream, policymakers and industry representatives need to better understand the economic and policy consequences of these new types of risks in order to build regulatory approaches and risk management practices that can support and facilitate a healthy and robust DeFi ecosystem and, ultimately, the financial stability of the greater financial system and real economy.

Proof of Reserves: The practitioner’s guide to an emerging standard for increasing trust and transparency in digital asset platform services

With Noah Buxton, Amy Davine Kim, Patrick South, Sal Ternullo (and many other contributors). Available at the Chamber of Digital Commerce.

The Proof of Reserves Initiative is an industry-led initiative of the Chamber of Digital Commerce, created to be a key resource for digital asset exchanges and custodians in enabling consumers to have reasonable expectations of their service providers and to have comfort that their digital assets are held in a manner consistent with industry norms. Comprised of more than 100 industry participants, the Initiative includes accounting, audit, and legal experts, technologists, capital markets professionals, former regulators, and practitioners from around the globe. The Proof of Reserves Initiative develops best practices for digital asset platforms to demonstrate adequate reserves of assets to another party through a form of proof. This whitepaper introduces the Proof of Reserve procedure, proposes best practices, and discusses the need for these attestations.

Cryptoasset Market Structure and Concentration in the Presence of Network Effects

With Konstantinos Stylianou, Leonhard Spiegelberg, and Maurice Herlihy. Available on SSRN.

When network products and services become more valuable as their userbase grows (network effects), this tendency can become a major determinant of how they compete with each other in the market and how the market is structured. Network effects are traditionally linked to high market concentration, early-mover advantages, and entry barriers, and in the cryptoasset market they have been used as a valuation tool too. The recent resurgence of Bitcoin has been partly attributed to network effects too. We study the existence of network effects in six cryptoassets from their inception to obtain a high-level overview of the application of network effects in the cryptoasset market. We show that contrary to the usual implications of network effects, they do not serve to concentrate the cryptoasset market, nor do they accord any one cryptoasset a definitive competitive advantage, nor are they consistent enough to be reliable valuation tools. Therefore, while network effects do occur in cryptoasset networks, they are not a defining feature of the cryptoasset market as a whole.

Cryptodollars: The Story So Far

With Matt Walsh. Whitepaper published by Castle Island Ventures (July 2020) . Available at

This whitepaper covers the emergence of “cryptodollars” or stablecoins, and proposes a consistent definition and taxonomy of the phenomenon. We look at the growth of the phenomenon from virtually nothing in 2017 to over $11B in monetary base today. The paper attempts to explain why cryptodollars are having their moment today, why they are different from mere digital dollars, and whether they can retain their distinguishing traits long term. We analyse the relationship between large exchanges or ‘crypto banks’ and cryptodollars, proposing an interesting mutualistic connection. We compare the privately-issued cryptodollar phenomenon to historical free banking epochs to determine the similarities and a possible template for a way forward. Lastly, we chronicle the 28 cryptodollar projects with a capitalization over $1m and present a systematic review of the cryptodollar universe.

The Size of the Crypto Economy: Calculating Market Shares of Cryptoassets, Exchanges and Mining Pools

With Konstantinos Stylianou, University of Leeds, School of Law. Published in the Journal of Competition Law and Economics (June 2020). Available at OUP here. Preprint version on SSRN here.

As cryptoassets expand into mainstream economy, they invite heightened regulatory and investor scrutiny. A number of laws and regulations, such as antitrust (competition) laws and financial regulations, as well as investor decisions are informed by the relative economic size of cryptoassets, meaning that cryptoassets with larger market shares may become more attractive for regulation or investing. Properly measuring the economic footprint of cryptoassets, therefore, becomes imperative. However, the exercise has proven challenging for multiple reasons including unfamiliarity with the underlying technology and the role of involved actors, lack of understanding of the applicable metrics’ economic significance, and the unreliability of self-reported statistics, partly enabled by lack of regulation.

Acknowledging the centrality of cryptoasset measurements in a number of regulatory and policy-making areas, and the fact that previous attempts have been incomplete, simplistic, or even plainly wrong, this paper presents the first systematic examination of the economic footprint of cryptoassets and their constituent actors. We aim to achieve a number of objectives: to introduce, identify and organize all relevant and meaningful metrics of cryptoasset market share calculation; to develop associations between metrics, and to explain their meaning, application, and limitations so that it becomes obvious in which context metrics can be useful or not, and what the potential caveats are; and to present rich, curated, and vetted data to illustrate metrics and their use in measuring cryptoasset shares in their respective markets. The result is comprehensive guidance into the size of the crypto-economy and blockchain networks.

Cryptoasset Valuation, Theory and Practice

Chapter in ‘Cryptoassets: Legal, Regulatory, and Monetary Perspectives,’ ed. Chris Brummer [link]
Oxford University Press, 2019

This chapter reviews practitioner and academic work on the topic of cryptoasset valuation, introduces a value-driven taxonomy of cryptoassets, and investigates several assets directly to demonstrate how they might be valued. The ease of creating a token and an upswing of global retail enthusiasm inaugurated a token sale boom in 2017 that eclipsed venture funding for start-ups within the industry. A maturing data environment and the innate transparency of blockchains has led to more sophistication in the analysis of these economic systems; but widely agreed-upon valuation methodologies still do not exist. It has been suggested that cryptoassets such as bitcoin cannot be valued, only priced. Practitioners would do well to cross the aisle and work with their academic counterparts on deriving meaningful models for these assets; equally, academia should continue to grant cryptoassets the attention they deserve.

A Cross-Sectional Overview of Cryptoasset Governance and Implications for Investors

Master’s thesis for the University of Edinburgh, MSc Finance & Investment, distinction awarded.

Cryptocurrencies and their conceptual cousins – tokenized networks – represent a growing and still largely unregulated asset class. These draw upon the principles of free open source development and inherit governance structures from them, while introducing protocol-level economic incentives. This paper describes and analyzes governance models in these projects. This empirical study of fifty tokenized networks finds that governance structures are largely informal, obscure to investors, and characterized by the concentration of decision-making and funding. Innovations such as Proof of Stake, masternodes, and protocol-level tokenholder governance grant investors some governance rights, yet reliable implementations have not yet emerged. While decentralization is a stated goal of many of these projects, political governance in practice is highly centralized. This represents an overlooked risk factor for investors in this novel asset class.