Kornrapat Pongmala

EECS Department, University of California, Berkeley

Technical Report No. UCB/EECS-2023-247

December 1, 2023

http://www2.eecs.berkeley.edu/Pubs/TechRpts/2023/EECS-2023-247.pdf

In May 2022, an apparent speculative attack, followed by market panic, led to the precipitous downfall of UST, one of the most popular stablecoins at that time. However, UST is not the only stablecoin to have depegged in the past. Designing resilient and long-term stable coins, therefore, appears to present a hard challenge. To further scrutinize existing stablecoin designs, and ultimately leading to more robust systems, we need to understand where volatility emerges. Our work provides a game-theoretical model aiming to help identify why stablecoins suffer from a depeg. This game-theoretical model reveals that stablecoins have different price equilibria depending on the coin's architecture and mechanism to minimize volatility. Moreover, our theory is supported by extensive empirical data, spanning $1$ year. To that end, we collect daily prices for 22 stablecoins and on-chain data from five blockchains including the Ethereum and the Terra blockchain.

Decentralized Autonomous Organizations (DAOs) have emerged as a novel way to coordinate a group of (pseudonymous) entities towards a shared vision (e.g., promoting sustainability), utilizing self-executing smart contracts on blockchains to support decentralized governance and decision-making. In just a few years, over 4,000 DAOs have been launched in various domains, such as investment, education, health, and research. Despite such rapid growth and diversity, it is unclear how these DAOs actually work in practice and to what extent they are effective in achieving their goals. Given this, we aim to unpack how (well) DAOs work in practice. We conducted an in-depth analysis of a diverse set of 10 DAOs of various categories and smart contracts, leveraging on-chain (e.g., voting results) and off-chain data (e.g., community discussions) as well as our interviews with DAO organizers/members. Specifically, we defined metrics to characterize key aspects of DAOs, such as the degrees of autonomy. The degree of autonomy varies among DAOs, with some (e.g., Compound and Krausehouse) relying more on third parties than others. We offer a set of design implications for future DAO systems based on our findings.

Advisors: Dawn Song

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BibTeX citation:

@mastersthesis{Pongmala:EECS-2023-247,
    Author= {Pongmala, Kornrapat},
    Title= {Quantifying Stablecoin Stability and Decentralized Autonomous Organization (DAO) Autonomy},
    School= {EECS Department, University of California, Berkeley},
    Year= {2023},
    Month= {Dec},
    Url= {http://www2.eecs.berkeley.edu/Pubs/TechRpts/2023/EECS-2023-247.html},
    Number= {UCB/EECS-2023-247},
    Abstract= {In May 2022, an apparent speculative attack, followed by market panic, led to the precipitous downfall of UST, one of the most popular stablecoins at that time. However, UST is not the only stablecoin to have depegged in the past. Designing resilient and long-term stable coins, therefore, appears to present a hard challenge. To further scrutinize existing stablecoin designs, and ultimately leading to more robust systems, we need to understand where volatility emerges. Our work provides a game-theoretical model aiming to help identify why stablecoins suffer from a depeg. This game-theoretical model reveals that stablecoins have different price equilibria depending on the coin's architecture and mechanism to minimize volatility. Moreover, our theory is supported by extensive empirical data, spanning $1$ year. To that end, we collect daily prices for 22 stablecoins and on-chain data from five blockchains including the Ethereum and the Terra blockchain.

Decentralized Autonomous Organizations (DAOs) have emerged as a novel way to coordinate a group of (pseudonymous) entities towards a shared vision (e.g., promoting sustainability), utilizing self-executing smart contracts on blockchains to support decentralized governance and decision-making. In just a few years, over 4,000 DAOs have been launched in various domains, such as investment, education, health, and research. Despite such rapid growth and diversity, it is unclear how these DAOs actually work in practice and to what extent they are effective in achieving their goals. Given this, we aim to unpack how (well) DAOs work in practice. We conducted an in-depth analysis of a diverse set of 10 DAOs of various categories and smart contracts, leveraging on-chain (e.g., voting results) and off-chain data (e.g., community discussions) as well as our interviews with DAO organizers/members. Specifically, we defined metrics to characterize key aspects of DAOs, such as the degrees of autonomy. The degree of autonomy varies among DAOs, with some (e.g., Compound and Krausehouse) relying more on third parties than others. We offer a set of design implications for future DAO systems based on our findings.},
}

EndNote citation:

%0 Thesis
%A Pongmala, Kornrapat 
%T Quantifying Stablecoin Stability and Decentralized Autonomous Organization (DAO) Autonomy
%I EECS Department, University of California, Berkeley
%D 2023
%8 December 1
%@ UCB/EECS-2023-247
%U http://www2.eecs.berkeley.edu/Pubs/TechRpts/2023/EECS-2023-247.html
%F Pongmala:EECS-2023-247