Skip to main content
SpringerLink
Log in

On the Feasibility of Decentralized Derivatives Markets

  • Conference paper
  • First Online:
Financial Cryptography and Data Security (FC 2017)

Part of the book series: Lecture Notes in Computer Science ((LNSC,volume 10323))

Included in the following conference series:

Abstract

In this paper, we present Velocity, a decentralized market deployed on Ethereum for trading a custom type of derivative option. To enable the smart contract to work, we also implement a price fetching tool called PriceGeth. We present this as a case study, noting challenges in development of the system that might be of independent interest to whose working on smart contract implementations. We also apply recent academic results on the security of the Solidity smart contract language in validating our code’s security. Finally, we discuss more generally the use of smart contracts in modelling financial derivatives.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    https://github.com/VelocityMarket/pricegeth.

  2. 2.

    http://www.oraclize.it/.

  3. 3.

    What is gas? http://ethdocs.org/en/latest/contracts-and-transactions/account-types-gas-and-transactions.html#what-is-gas.

  4. 4.

    or any other events that an options contract can be based on.

  5. 5.

    Ethereum symbol.

  6. 6.

    Fix for the multiple payout bug: https://github.com/VelocityMarket/Options-Contract/commit/f3c8d0ef66b886c9ee8b432e92c83f3a4fb525ba.

  7. 7.

    Simple collared option smart contract: https://github.com/VelocityMarket/Options-Contract.

  8. 8.

    Data and Payments for your Smart Contracts https://smartcontract.com/.

  9. 9.

    Price API for Smart-Contracts on Ethereum Blockchain https://github.com/VelocityMarket/pricegeth.

  10. 10.

    Official Go implementation of the Ethereum protocol https://geth.ethereum.org.

  11. 11.

    PriceGeth Library https://github.com/VelocityMarket/pricegeth.

  12. 12.

    https://docs.oraclize.it/#security-tlsnotary-proof.

  13. 13.

    https://github.com/slockit/DAO.

  14. 14.

    Wei: Smallest unit of Ethereum, equevalent to 0.000000000000000001 ETH.

  15. 15.

    put into permanent storage.

  16. 16.

    Long-term gas cost changes for IO-heavy operations to mitigate transaction spam attacks https://github.com/ethereum/EIPs/issues/150.

  17. 17.

    https://github.com/VelocityMarket/Options-Contract.

References

  1. Atzei, N., Bartoletti, M., Cimoli, T.: A survey of attacks on ethereum smart contracts (SoK). In: Maffei, M., Ryan, M. (eds.) POST 2017. LNCS, vol. 10204, pp. 164–186. Springer, Heidelberg (2017). https://doi.org/10.1007/978-3-662-54455-6_8

    Chapter  Google Scholar 

  2. Benet, J.: Ipfs-content addressed, versioned, p2p file system (2014). arXiv:1407.3561

  3. Bentov, I., Mizrahi, A., Rosenfeld, M.: Decentralized prediction market without arbiters (2017). arXiv:1701.08421

  4. Buterin, V., et al.: A next-generation smart contract and decentralized application platform (2014)

    Google Scholar 

  5. Clark, J., Bonneau, J., Felten, E.W., Kroll, J.A., Miller, A., Narayanan, A.: On decentralizing prediction markets and order books. In: WEIS (2014)

    Google Scholar 

  6. Irvine, D.: Maidsafe distributed file system. Technical report, maidsafe.net limited (2010)

    Google Scholar 

  7. Kievit-Kylar, B., Horlacher, C., Godard, M., Saucier, C.: Equibit: a peer-to-peer electronic equity system (2016). arXiv:1612.06953

  8. Luu, L., Chu, D.-H., Olickel, H., Saxena, P., Hobor, A.: Making smart contracts smarter. In: Proceedings of 2016 ACM SIGSAC Conference on Computer and Communications Security, pp. 254–269. ACM (2016)

    Google Scholar 

  9. Nakamoto, S.: Bitcoin: a peer-to-peer electronic cash system (2008)

    Google Scholar 

  10. Szabo, N.: The idea of smart contracts (1997)

    Google Scholar 

  11. Wood, G.: Ethereum: a secure decentralised generalised transaction ledger. Ethereum Project Yellow Paper (2014)

    Google Scholar 

  12. Zhang, F., Cecchetti, E., Croman, K., Juels, A., Shi, E.: Town crier: an authenticated data feed for smart contracts. In: Proceedings of 2016 ACM SIGSAC Conference on Computer and Communications Security, pp. 270–282. ACM (2016)

    Google Scholar 

  13. okturtles: A blockchain-based DNS, http server that fixes https security (2014)

    Google Scholar 

  14. Finley, K.: A 50 million dollar hack just showed that the DAO was all too human. Wired (2016)

    Google Scholar 

  15. Demian Lerner, S.: Rootstock: bitcoin powered smart contracts. Whitepaper (2015)

    Google Scholar 

  16. Daian, P.: Analysis of the DAO exploit. Hacking, Distributed (2016)

    Google Scholar 

  17. Reitwiessner, C.: Security alert: solidity variables can be overwritten in storage. Ethereum Blog (2016)

    Google Scholar 

  18. ConsenSys: Ethereum contract security techniques and tips. ConsenSys (2016)

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Bitaccess, Ottawa, Canada

    Shayan Eskandari, Vignesh Sundaresan & Moe Adham

  2. Concordia University, Montreal, Canada

    Jeremy Clark

Authors
  1. Shayan Eskandari
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Jeremy Clark
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Vignesh Sundaresan
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Moe Adham
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Jeremy Clark .

Editor information

Editors and Affiliations

  1. Leibniz Universität Hannover, Hannover, Germany

    Michael Brenner

  2. New Jersey Institute of Technology, Newark, New Jersey, USA

    Kurt Rohloff

  3. New York University, New York, New York, USA

    Joseph Bonneau

  4. University of Illinois at Urbana-Champaign, Urbana, Illinois, USA

    Andrew Miller

  5. University of Luxembourg, Luxembourg, Luxembourg

    Peter Y.A. Ryan

  6. University of Melbourne, Parkville, Victoria, Australia

    Vanessa Teague

  7. University of Stirling, Stirling, United Kingdom

    Andrea Bracciali

  8. University of Trento, Trento, Italy

    Massimiliano Sala

  9. University of Trento, Trento, Italy

    Federico Pintore

  10. Agari Inc., San Mateo, California, USA

    Markus Jakobsson

A Demo Website (UI) for the Velocity Smart Contract

A Demo Website (UI) for the Velocity Smart Contract

See Fig. 5.

Fig. 5.
figure 5

Velocity options smart contract demo

Full size image

Rights and permissions

Reprints and permissions

Copyright information

© 2017 International Financial Cryptography Association

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Eskandari, S., Clark, J., Sundaresan, V., Adham, M. (2017). On the Feasibility of Decentralized Derivatives Markets. In: Brenner, M., et al. Financial Cryptography and Data Security. FC 2017. Lecture Notes in Computer Science(), vol 10323. Springer, Cham. https://doi.org/10.1007/978-3-319-70278-0_35

Download citation

  • DOI: https://doi.org/10.1007/978-3-319-70278-0_35

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-70277-3

  • Online ISBN: 978-3-319-70278-0

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics

Search

Navigation