Staking

In crypto assets, staking is the act of time-locking stablecoin in a smart-contracts, typically with the promise of a yield or side payment of a governance-token as a result of depositing the cryptoassets with the third party.

This behaves somewhat like a cd except the depository institution has no legal obligation to guarantees to custody funds or pay out said payments as it exists as a form of regulatory-arbitrage outsde the regulatory perimeter.

Staking is a common building block in many so-called DeFi protocols.

See also counterparty risk, bank run, Ponzi scheme.

References

  1. Allen, Hilary J. 2022. ‘DeFi: Shadow Banking 2.0?’ William & Mary Law Review, Forthcoming.
  2. Walch, Angela. 2019. ‘Deconstructing ‘Decentralization’: Exploring the Core Claim of Crypto Systems’. C. Brummer (Ed.), Crypto Assets: Legal and Monetary Perspectives, 1–36. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3326244.
  3. Aramonte, Sirio, Wenqian Huang, and Andreas Schrimpf. 2021. ‘DeFi Risks and the Decentralisation Illusion’, 16.
  4. Steele, Graham. 2021. ‘The Miner of Last Resort: Digital Currency, Shadow Money and the Role of the Central Bank’. Technology and Government, Emerald Studies in Media and Communications, Forthcoming.
  5. Gorton, Gary B., and Jeffery Zhang. 2021. ‘Taming Wildcat Stablecoins’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3888752.
  6. Bennet, Tomlin. n.d. ‘Tether and Bitfinex Introduction’. Accessed 2 March 2022. https://bennettftomlin.com/2021/08/08/tether-and-bitfinex-introduction/.
  7. Krugman, Paul. 2018. ‘Transaction Costs and Tethers: Why I’m a Crypto Skeptic’. The New York Times 21.
  8. Castor, Amy. 2021. ‘The Curious Case of Tether: A Complete Timeline of Events’. https://amycastor.com/2019/01/17/the-curious-case-of-tether-a-complete-timeline-of-events/.
  9. Griffin, John M, and Amin Shams. 2020. ‘Is Bitcoin Really Untethered?’ The Journal of Finance 75 (4): 1913–64.
  10. Brennecke, Martin, Benjamin Schellinger, Nils Urbach, and Tobias Guggenberger. 2022. ‘The De-Central Bank in Decentralized Finance: A Case Study of MakerDAO’. https://doi.org/10.24251/HICSS.2022.737.
  11. Clements, Ryan. 2021. ‘Built to Fail: The Inherent Fragility of Algorithmic Stablecoins’. SSRN Electronic Journal 11: 131. https://doi.org/10.2139/ssrn.3952045.
  12. Ferreira, Agata. 2021. ‘The Curious Case of Stablecoins—Balancing Risks and Rewards?’ Journal of International Economic Law 24 (4): 755–78. https://doi.org/10.1093/jiel/jgab036.
  13. Malloy, Matthew, and David Lowe. 2021. ‘Global Stablecoins: Monetary Policy Implementation Considerations from the U.S. Perspective’. Finance and Economics Discussion Series 2021 (020): 1–14. https://doi.org/10.17016/feds.2021.020.
  14. Mizrach, Bruce. 2021. ‘Stablecoins: Survivorship, Transactions Costs and Exchange Microstructure’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3835219.
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