Permissionless blockchains require a protocol to generate consensus. Many prominent permissionless blockchains employ Proof-of-Work (PoW) for that purpose, but PoW possesses significant shortcomings. Various alternatives have been proposed. This paper provides the first formal economic model of...

We explain the mechanics of smart contracts. We then highlight benefits of smart contracts such as overcoming commitment problems. We also discuss limitations such as the difficulty for smart contracts to access information external to the blockchain and the difficulty of integrating smart...

This paper provides an empirical overview of the largely unexplored public blockchain ecosystem. Our overview highlights that only a few blockchains dominate the ecosystem although no single blockchain, not even Bitcoin, dominates uniformly. We explain our empirical findings with a simple...

Do the rich always get richer by investing in a cryptocurrency for which new coins are issued according to a Proof-of-Stake (PoS) protocol? We answer this question in the negative: Without trading, the investor shares in the cryptocurrency are martingales that converge to a well-defined limiting...

We model a supply chain with a single risk-averse manufacturer who purchases from vendors and sells to consumers. We find that blockchain adoption always enhances manufacturer welfare in this setting when adoption costs are zero; as a consequence, the manufacturer always adopts blockchain for...

We study the equilibrium level of staking in a Proof-of-Stake blockchain when investors have different trading horizons. We find that, contrary to conventional wisdom, staking levels do not always increase in block rewards. Rather, block rewards serve as an inflationary transfer from...