Potential Sources of Internet of Value Systemic Risk

EasyChair Preprint 5990

Abstract

The lack of interoperability – driven by the diversity of missions and technological proposals for ledgers – is not the only source of systemic risk envisaged here. In addition, the lack of scalability of these new network technologies could worsen the risks of assets and value, in general, being lost in endless sidechains.

Therefore, another source of systemic risk may come precisely from the nature of digital assets used as collateral. Tokenisation and collateralisation might create new types of much more complex asset interdependencies, and the collapse of even a small asset used as collateral could trigger the domino effect of a failure cascade.

Some collaterals value might fade by their lack of usage, trust, lost in a minor ledger, and indeed because they are poorly preserved. Finally, the preservation of collateral value over time must be considered. The preservation of value tackles the problem of value loss through time and exchanges (de la Rosa, 2019).

Keyphrases: Blockchain, DLT, Internet of Value

@booklet{EasyChair:5990,
  author    = {Josep Lluis de la Rosa Esteva},
  title     = {Potential Sources of Internet of Value Systemic Risk},
  howpublished = {EasyChair Preprint 5990},
  year      = {EasyChair, 2021}}