Author(s) :

Vedant.

Volume/Issue :

Abstract :

Autonomous Finance protocols use blockchain- based tools to mimic banking, investment and trading solutions and provide a viable framework that creates incentives and conditions for the development of an alternative financial services market. In this respect, they can be seen as alternative financial vehicles that mitigate portfolio risk, which is particularly important at a time of increasing uncertainty in financial markets. In particular, some Autonomous Finance protocols offer an automated, low-risk way to generate returns through a “delta-neutral” trading strategy that reduces volatility. The main financial operations of Autonomous Finance protocols are implemented using appropriate algorithms, but unlike traditional finance, where issues of value and valuation are commonplace, Autonomous Finance lacks a similar value- based analysis. The aim of this study is to evaluate relevant Autonomous Finance performance metrics related to the valuations of these protocols through a thorough analysis based on various scientific methods and to show what influences the valuations of these protocols. More specifically, the study identifies how Autonomous Finance protocol valuations depend on the total value locked and other performance variables, such as protocol revenue, total revenue, gross merchandise volume and inflation factor, and assesses these relationships. The study analyzes the valuations of 30 selected protocols representing three different classes of Autonomous Finance (i.e., decentralized exchanges, lending protocols and asset management) in relation to their respective performance measures. The results show that the valuations of Autonomous Finance protocols depend to some extent on the performance measures of these protocols under study, although the magnitude of the relationships and their directions differ for the different variables.

No. of Downloads :

0