Characteristics and role of digital tokens backed by traditional assets using blockchain technology
Project manager: dr Aleksander Mercik
The goal of the project is to identify the mechanisms of stablecoin and to identify
factors influencing the propensity of investors to accept and/or purchase this type of asset. Stablecoins, which are a segment of the cryptoasset market,1 are digital units of value that are not exact representations of currencies or baskets of currencies, but rely on a series of stabilization tools designed to minimize price fluctuations (cf. p. Bullmann et al., 2019).
Previous research on stablecoins has focused primarily on verifying the basic intended property of this class of crypto-assets – low price volatility (Grobys et al., 2021). The design of stablecoins has implications for effectiveness in ensuring price stability (as shown by Giudici et al., 2022; Jarno & Kolodziejczyk, 2021, among others). In addition, among the studies on stablecoin, a strand of research on the price formation mechanisms in the relationship between stablecoins and other types of crypto-assets has emerged. There is also evidence of a positive relationship between stablecoin issuance and cryptocurrency prices, particularly Bitcoin (Ante et al., 2021), although in intraday terms, this relationship may be short-lived (Saggu, 2022). At the same time, sharp increases in stablecoin volatility may be a predictor of negative changes in the Bitcoin price (Grobys & Huynh, 2021). In addition, the role of stablecoins as potential drivers of speculative bubbles in the cryptocurrency market was investigated. However, no evidence has been found to support the hypotheses of stablecoin’s effect on increasing the prices of other cryptoassets (Kristoufek, 2021, 2022). Another strand of research deals with their potential role as a hedge or so-called “hedge”. safe havens (Baur & Lucey, 2009) and indicate that they can be used as safe havens against other cryptocurrencies (Baur & Hoang, 2021), although this property may depend on market conditions, and the collateral basis of stablecoins affects their effectiveness in the safe haven role (Wang et al., 2020). The hedging properties of stablecoins against other cryptocurrencies were maintained during and after the COVID-19 pandemic (Gadi & Sicilia, 2022).
A common element of the studies presented earlier is the single cryptocurrency approach. The analyses conducted, both of stablecoins and representatives of other cryptocurrencies, used unitary projects representing each token type. In addition, a common problem for researchers is the difficulty of accessing the data, the datasets used are usually not free of the so-called “data”. survivors bias, which affects the results of long-term studies,
and in addition, these data are usually not representative of the entire crypto market, containing only the tokens most popular at the time of the study.
Funding organization:
National Science Center
Programme:
MINIATURA 7
Project duration:
05/09/2023 – 04/09/2024
Funding amount:
38 561 PLN
Project status:
Project in progress
