Ledger

Granger-Causal Effects of Consumer Behavior on NFT Sales

Stoyan Angelov — 2024-05-28

An understanding of what influences the NFT market is valuable in such a speculative space, and predictors of directional shifts in NFT sales are beneficial to NFT users and investors alike. For these reasons, research was undertaken to determine if metrics relating to consumer behavior could predict NFT market sales. To begin, a Buyer Activity Metric and a Buyer Valuation Metric were calculated using open-access data regarding the NFT market. A three-variable vector autoregression (VAR) model was then constructed using these metrics and NFT sales data. Changes in monthly NFT sales were found to be Granger-caused by changes in both the Buyer Activity Metric and the Buyer Valuation Metric. Changes in each metric were determined to precede changes in NFT sales by up to four months. The associations were also determined to be unidirectional, indicating a clear cause-and-effect style relationship. Questions about these predictive abilities were then theoretically explored.

Reconciling Open Interest with Traded Volume in Perpetual Swaps

Ioannis Giagkiozis — 2024-04-03

Perpetual swaps are derivative contracts that allow traders to speculate on, or hedge, the price movements of cryptocurrencies. Unlike futures contracts, perpetual swaps have no settlement or expiration in the traditional sense. The funding rate acts as the mechanism that tethers the perpetual swap to its underlying with the help of arbitrageurs. Open interest, in the context of perpetual swaps and derivative contracts in general, refers to the total number of outstanding contracts at a given point in time. It is a critical metric in derivatives markets as it can provide insight into market activity, sentiment and overall liquidity. It also provides a way to estimate a lower bound on the collateral required for every cryptocurrency market on an exchange. This number, cumulated across all markets on the exchange in combination with proof of reserves, can be used to gauge whether the exchange in question operates with unsustainable levels of leverage, which could have solvency implications. We find that open interest in Bitcoin perpetual swaps is systematically misquoted by some of the largest derivatives exchanges; however, the degree varies, with some exchanges reporting open interest that is wholly implausible to others that seem to be delaying messages of forced trades, i.e., liquidations. We identify these incongruities by analyzing tick-by-tick data for two time periods in 2023 by connecting directly to seven of the most liquid cryptocurrency derivatives exchanges.

Decentralization, Blockchains, and the Development of Smart Communities in Economically Challenging Environments

Brett Bourbon — 2024-06-07

Current implementations of blockchain technologies for smart cities assume environments with ample socio-technical resources. In this paper, we analyze four particular cases to show how blockchains can be used to create smart communities within under-developed and resource-poor environments. In these contexts, blockchains were critical in developing and maintaining trust within the community while meeting specific social needs. Our analysis of these specific cases was then used to derive a definition of a “smart community”. We provide a schematic outline of the foundational elements for the development of smart communities using blockchain technology. The goal of our paper is to show that blockchains hold promise not just for building smart cities in resource-rich contexts, but also for building smart communities in resource-impoverished contexts using a bottom-up, problem-driven approach.