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The Taub Faculty of Computer Science Events and Talks

Interactions between Blockchain Networks Based on Market Analysis
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Ori Mazor (M.Sc. Thesis Seminar)
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Thursday, 11.07.2024, 16:30
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Zoom Lecture: 5701477766
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Advisor: Prof. Ori Rottenstreich
Cryptocurrencies have gained popularity in recent years. They are often implemented on one or more of the over 1000 existing blockchain networks, including the popular Bitcoin and Ethereum networks. Recently, various technologies known as blockchain interoperability have been developed to connect these different blockchains, creating an interconnected blockchain ecosystem. Interoperability refers to the ability of blockchains to share information with each other. Decentralized Exchanges (DEXs), which are peer-to-peer marketplaces where traders can exchange cryptocurrencies, play a significant role in this interconnected ecosystem. We aim to understand the blockchain ecosystem and the connections between blockchains, we view that as the blockchain interoperability graph. Our approach is based on analyzing the correlation between cryptocurrency prices implemented over different blockchains. We examine over 4800 cryptocurrencies implemented on 76 blockchains based on their daily prices. This experimental study has potential implications for decentralized finance (DeFi), including portfolio investment strategies and risk management. Additionally, we present a framework to study cross-chain arbitrage between DEXs. We demonstrate the framework by analyzing two popular DEXs: QuickSwap which is implemented on the Polygon blockchain network and PancakeSwap that is implemented on the BNB Chain blockchain network. We study the potential revenue from conducting cross-chain arbitrage and lay the basis for understanding its potential impact on the future of blockchain technology. Overall, the analysis provides insight into the evolving blockchain ecosystem, highlighting opportunities for innovation and financial strategies in the decentralized market.