Systemic Risks of Decentralized Financial Technology

About the Project

Blockchain technology has popularized decentralized financial infrastructure by removing central intermediaries and replacing oversight and regulatory functions with software protocols. This phenomenon is commonly called decentralized finance (DeFi). It has a wide range of applications, including decentralized exchanges, decentralized digital currencies, stablecoins, peer-to-peer payment solutions, etc. These applications transform traditional financial services towards a more inclusive and accessible financial ecosystem. However, these new technologies also bring challenges in developing practical, fair, transparent, and effective regulatory solutions [1-3].

This project will apply system modelling combined with the principles of behavioural finance to analyse the stability and growth of the decentralized currency system, examine the roles of households and governments within this system, and propose measures to assess the systemic risks of this infrastructure. This systemic model will be developed bottom-up, focusing on analysing consumer behaviours, information dissemination, and capital flows, ultimately leading to system-level interactions and network formation. This approach is valuable for understanding the evolution of emerging techniques that are either in the early stages of development or still at the conceptual phase, where data availability is limited. It is well-suited for research on DeFi infrastructure, given its potential for rapid expansion and adoption, alongside the limited exploration of risks, challenges, and socio-economic impacts. The research aims to bridge the gap between theory and practice by offering a dynamic, adaptive simulation framework to understand competition, information asymmetry, and behavioural biases in a self-adjusting DeFi system. Its outcome will not only contribute to the expansion of academic literature on DeFi but also provide crucial insights for developing regulatory frameworks to support the rapid evolution of DeFi infrastructure.

[1] School, G. L., Attorney, Capital Markets Law; J. S. M. ,. Stanford Law. (2024). Regulating Decentralized Financial Technology: A Qualitative Study on the Challenges of Regulating DeFi with a Focus on Embedded Supervision. Stanford Journal of Blockchain Law & Policy. https://stanford-jblp.pubpub.org/pub/regulating-defi

[2] Raskin, M., & Yermack, D. (2018). Digital currencies, decentralized ledgers and the future of central banking. In Research handbook on central banking (pp. 474-486). Edward Elgar Publishing.

[3] Tunzina, T., Chayon, M. A. K., Jitu, P. G., Ankon, M. U., Joy, S. N., Shaha, R. K., ... & Pham, P. H. (2024). Blockchain-based Central Bank Digital Currency: Empowering Centralized Oversight with Decentralized Transactions. IEEE Access.

What we offer:

Cardiff's School of Mathematics provides an excellent postgraduate research environment including:

• research facilities at Abacws (co-designed by our PGR community),
• a vibrant research culture including a wide range of research events,
• access to national course centres in mathematics, statistics and Operational Research,
• comprehensive professional skills training offered by Cardiff’s Doctoral Academy.
• collaborations with other disciplines and with a wide range of external partners (industry and society).

The PGR community is very active in running the SIAM-IMA Student Chapter, a valuable forum for exchange of ideas and public engagement.

This studentship will be undertaken within the Operational Research group at the School of Mathematics. The group’s members have wide-ranging interests, and offer a dynamic environment for the student to engage with experts in operational research and many other fields in mathematics and other disciplines. The group hosts a weekly seminar inviting external speakers.

Completing a PhD in mathematics opens up a range of possible next steps, from continuing an academic career to working in mathematically technical roles in industry.

The 3.5 year programme does not have any funding attached but successful applicants will receive a small Research Training Support Grant to cover costs such as research consumables, training, conferences and travel.

The possible start dates for this PhD are October, January, April or July.

What you bring:

You should have a 1st or upper 2nd class UK Honours degree (or equivalent) and/or a Master’s degree in mathematics or a suitable related subject.

Applicants for whom English is not their first language must demonstrate their proficiency by obtaining an IELTS score of at least 6.5 overall, with a minimum of 5.5 in each skills component, or equivalent qualification.

Cardiff University is committed to supporting and promoting equality and diversity and to creating an inclusive research environment. We particularly welcome applications from underrepresented groups.

How to apply:

Applicants should apply through the Cardiff University online PhD application portal, for a Doctor of Philosophy in Mathematics with your desired entry point.

You must include

• Transcript(s) of your degree(s) (with certified translations if appropriate)
• Degree certificate(s) (with certified translations if appropriate)
• References - these should be current and verifiable
• Personal statement (as part of the university application form, or as a separate attachment, if you prefer) providing a clear explanation of your research interest, preparation undertaken, and an understanding of the project.

Note that the 'register interest' option will not submit an application. Please follow the instructions above and submit your application via our online portal. Incomplete applications will not be considered.

Funding Notes

We welcome applications from potential students who have their own sponsorship in place or are in a position to self-fund.

In the Research Proposal section of your application, please specify the project title and supervisors of this project.

In the funding section, please select that you will be self-funding and enter your source of funding.