FIN-413 / 3 credits

Teacher: Xu Jiahua

Language: English

Withdrawal: It is not allowed to withdraw from this subject after the registration deadline.

Remark: Special schedule: see the IF website https://go.epfl.ch/fe


Summary

This course provides an introduction to distributed ledger technology, blockchains and cryptocurrencies, and their potential applications in finance and banking.

Content

Keywords

Electronic Money, Cryptocurrencies, Distributed Ledger Technology, Blockchain, Bitcoin, Ethereum, Smart Contracts

Learning Prerequisites

Recommended courses

Introduction to Finance

Important concepts to start the course

Cryptography, Databases, Payment Systems

Learning Outcomes

By the end of the course, the student must be able to:

  • Use basic cryptographic concepts including private/public keys, signatures, hash functions, Merkle trees
  • Distinguish between different types of blockchain (private vs public, permissioned vs non-permissioned, etc.) and cryptocurrencies (utility tokens, security tokens, stablecoins etc.)
  • Recall historical examples of electronic money
  • Formulate alternative approaches to Byzantine fault-tolerant consensus including proof of work, proof of stake, etc.
  • Sketch the basic setup of Bitcoin, Ethereum, XRP Ledger and EOSIO
  • Conduct wallet installation, inter-wallet transactions and cryptocurrency trading
  • Critique misuse of blockchains
  • Investigate fraudulent activities in the crypto-market
  • Present existing examples of DeFi (Decentralizing Finance)
  • Explore potential financial applications of DLT (Distributed Ledger Technology)
  • Propose business strategies for blockchain start-ups

Transversal skills

  • Access and evaluate appropriate sources of information.
  • Communicate effectively with professionals from other disciplines.
  • Demonstrate the capacity for critical thinking

Teaching methods

Lectures, exercises, group project

Assessment methods

20% In-class and take-home assignments

60% Group essay

20% Group presentation

Supervision

Office hours Yes
Assistants Yes
Forum Yes

Resources

Virtual desktop infrastructure (VDI)

No

Bibliography

Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. Retrieved from www.bitcoin.org

Tucker, C., & Catalini, C. (2018). What Blockchain Can't Do. Harvard Business Review. Retrieved from https://hbr.org/2018/06/what-blockchain-cant-do

Foley, S., Karlsen, J. R., & Putnins, T. J. (2019). Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed through Cryptocurrencies? Review of Financial Studies32(5), 1798-1853. https://doi.org/10.1093/rfs/hhz015

Xu, J., & Livshits, B. (2019). The Anatomy of a Cryptocurrency Pump-and-Dump Scheme. 28th USENIX Security Symposium (USENIX Security 19), 1609-1625. https://arxiv.org/abs/1811.10109

Catalini, C., & Gans, J. S. (2020). Some simple economics of the blockchain. Communications of the ACM63(7), 80-90. https://doi.org/10.1145/3359552

A. Braun, L. H. Cohen, J. Xu, fidentiaX: The Tradable Insurance Marketplace on Blockchain. Harvard Bus. Sch. Case. 219-116 (2020) (available at https://www.hbs.edu/faculty/Pages/item.aspx?num=56189).

Perez, D., Xu, J., & Livshits, B. (2020). Revisiting Transactional Statistics of High-scalability Blockchains. ACM Internet Measurement Conference16(20), 535-550. https://doi.org/10.1145/3419394.3423628

Richardson, A., & Xu, J. (2020). Carbon Trading with Blockchain. In P. Pardalos, I. Kotsireas, Y. Guo, & W. Knottenbelt (Eds.), Mathematical Research for Blockchain Economy (pp. 105-124). https://doi.org/10.1007/978-3-030-53356-4_7

Xu, J., Ackerer, D., & Dubovitskaya, A. (2021). A Game-Theoretic Analysis of Cross-Chain Atomic Swaps with HTLCs. The 41st International Conference on Distributed Computing Systems (ICDCS). https://arxiv.org/abs/2011.11325

Dubovitskaya, A., Ackerer, D., & Xu, J. (2021). A Game-Theoretic Analysis of Cross-Ledger Swaps with Packetized Payments. Workshop Proceedings of Financial Cryptography and Data Security. http://arxiv.org/abs/2103.02056

Perez, D., Werner, S. M., Xu, J., & Livshits, B. (2021). Liquidations: DeFi on a Knife-edge. Financial Cryptography and Data Security. http://arxiv.org/abs/2009.13235

Xu, J., & Vadgama, N. (2021). From banks to DeFi: the evolution of the lending market. In N. Vadgama, J. Xu, & P. Tasca (Eds.), Enabling the Internet of Value: How Blockchain Connects Global Businesses. http://arxiv.org/abs/2104.00970

Peduzzi, G., James, J., & Xu, J. (2021). Jack The Rippler: Arbitrage on the Decentralized Exchange of the XRP Ledger. 3rd Conference on Blockchain Research & Applications for Innovative Networks and Services (BRAINS). https://arxiv.org/abs/2106.16158

Xu, J., Vavryk, N., Paruch, K., & Cousaert, S. (2021). SoK: Decentralized Exchanges (DEX) with Automated Market Maker (AMM) protocols. http://arxiv.org/abs/2103.12732

Cousaert, S., Xu, J., & Matsui, T. (2021). SoK: Yield Aggregators in DeFi. http://arxiv.org/abs/2105.13891

Ibanez, J. I., Bayer, C. N., Tasca, P., & Xu, J. (2021). REA, Triple-Entry Accounting and Blockchain: Converging Paths to Shared Ledger Systems. In SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3602207

Ressources en bibliothèque

In the programs

  • Semester: Fall
  • Exam form: During the semester (winter session)
  • Subject examined: Financial applications of blockchains and distributed ledgers
  • Lecture: 2 Hour(s) per week x 14 weeks
  • Semester: Fall
  • Exam form: During the semester (winter session)
  • Subject examined: Financial applications of blockchains and distributed ledgers
  • Lecture: 2 Hour(s) per week x 14 weeks
  • Semester: Fall
  • Exam form: During the semester (winter session)
  • Subject examined: Financial applications of blockchains and distributed ledgers
  • Lecture: 2 Hour(s) per week x 14 weeks

Reference week

 MoTuWeThFr
8-9     
9-10     
10-11     
11-12     
12-13     
13-14     
14-15     
15-16 EXTRANEF126   
16-17    
17-18    
18-19    
19-20     
20-21     
21-22     

Tuesday, 15h - 19h: Lecture EXTRANEF126