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Liquidity pools and staking

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concepts/cds.md
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# Credit Default Swaps
Credit default swaps are a type of [derivative](derivative.md) contract with underlying of debt on [real estate](real-estate.md) [securities](security.md). Credit default swaps are a type of advanced financial engineering that is widely attributed to the 2008 financial subprime crisis.
See also [regulatory-capture](regulatory-capture.md) and [derivative](derivative.md).
## References

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concepts/cross-bridges.md
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# Cross Bridges
In crypto technology a *cross bridge* is a combination of [smart-contracts](smart-contracts.md) across multiple [blockchain](blockchain.md) networks that facilitate interoperability and transactions across different [cryptoassets](cryptoasset.md).
Cross bridges are commonly used for [money laundering](money-laundering.md) transactions in which multiple [cryptoassets](cryptoasset.md) are swapped in a method called *chain-hopping* which is used to obscure the provenance of funds associated with [illicit financing](illicit-financing.md).
See also [defi](defi.md) and [money-laundering](money-laundering.md).
## References
1. Orcutt, Mike. 2020. ‘This Is How North Korea Uses Cutting-Edge Crypto Money Laundering to Steal Millions’. MIT Technology Review. MIT Technology Review. http://www.technologyreview.com/2020/03/05/916688/north-korean-hackers-cryptocurrency-money-laundering/.
1. Allen, Hilary J. 2022. ‘DeFi: Shadow Banking 2.0?’ William & Mary Law Review, Forthcoming.
1. Walch, Angela. 2019. ‘Deconstructing ‘Decentralization’: Exploring the Core Claim of Crypto Systems’. C. Brummer (Ed.), Crypto Assets: Legal and Monetary Perspectives, 1–36. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3326244.

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# Counter-terrorism financing
Counter-terrorism financing (CFT or CTF) is a regulatory requirement that financial service providers and [money services business](money-services-business.md) may not trade or offer services with entities who are sanctioned or on terrorist watch lists.
Counter-terrorism financing (CFT or CTF) is a regulatory requirement that financial service providers and [money services business](money-services-business.md) may not trade or offer services with entities who are sanctioned or on terrorist watch lists.
## References
1. Orcutt, Mike. 2020. ‘This Is How North Korea Uses Cutting-Edge Crypto Money Laundering to Steal Millions’. MIT Technology Review. MIT Technology Review. http://www.technologyreview.com/2020/03/05/916688/north-korean-hackers-cryptocurrency-money-laundering/.
1. Fanusie, Yaya, and Tom Robinson. 2018. ‘Bitcoin Laundering: An Analysis of Illicit Flows into Digital Currency Services’. Center on Sanctions and Illicit Finance Memorandum, January.

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## Enclosure
See also [market manipulation](market-manipulation.md), [public goods problem](public-goods-problem.md) and [free rider problem](free-rider-problem.md).

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concepts/liquidity-pool.md
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# Liquidity Pool
In [DeFi](defi.md) systems a *liquidity pool* refers to a "pool" of [cryptoasset](cryptoasset.md) (typically [stablecoins](stablecoin.md)) that are locked in a smart contract. The pool provides [liquidity](liquidity.md) for end users who want to use the underlying crypto asset for swap transactions who in turn pay transaction fees, theoretically these transaction fees are then used to incentivize the stablecoin holders who [stake](staking.md) their tokens in the pool by generating yield in return for liquidity.
See also [counterparty risk](counterparty-risk.md), [DeFi](defi.md), and [deposit insurance](deposit-insurance.md).
## References
1. Allen, Hilary J. 2022. ‘DeFi: Shadow Banking 2.0?’ William & Mary Law Review, Forthcoming.
1. Walch, Angela. 2019. ‘Deconstructing ‘Decentralization’: Exploring the Core Claim of Crypto Systems’. C. Brummer (Ed.), Crypto Assets: Legal and Monetary Perspectives, 1–36. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3326244.
1. Aramonte, Sirio, Wenqian Huang, and Andreas Schrimpf. 2021. ‘DeFi Risks and the Decentralisation Illusion’, 16.
1. Sun, Xiaotong. 2021. ‘Centralized Governance in Decentralized Finance (DeFi): A Case Study of MakerDAO’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3971791.
1. Zetzsche, Dirk A., Douglas W. Arner, and Ross P. Buckley. 2020. ‘Decentralized Finance’. Journal of Financial Regulation 6 (2): 172–203. https://doi.org/10.1093/jfr/fjaa010.

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1. Shri T Rabi Sankar. n.d. ‘Cryptocurrencies – An Assessment’. Reserve Bank of India. Accessed 2 March 2022. https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1196.
1. Bartoletti, Massimo, Salvatore Carta, Tiziana Cimoli, and Roberto Saia. 2020. ‘Dissecting Ponzi Schemes on Ethereum: Identification, Analysis, and Impact’. Future Generation Computer Systems 102: 259–77.
1. Corradi, Fiammetta, and Philipp Höfner. 2018. ‘The Disenchantment of Bitcoin: Unveiling the Myth of a Digital Currency’. International Review of Sociology 28 (1): 193–207. https://doi.org/10.1080/03906701.2018.1430067.
1. Moore, Tyler, Jie Han, and Richard Clayton. 2012. ‘The Postmodern Ponzi Scheme: Empirical Analysis of High-Yield Investment Programs’. In Financial Cryptography and Data Security, edited by Angelos D. Keromytis, 7397:41–56. Lecture Notes in Computer Science. Berlin, Heidelberg: Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-32946-3_4.
1. [Investor.gov Ponzi Scheme](https://www.investor.gov/protect-your-investments/fraud/types-fraud/ponzi-scheme)
1. Moore, Tyler, Jie Han, and Richard Clayton. 2012. ‘The Postmodern Ponzi Scheme: Empirical Analysis of High-Yield Investment Programs’. In Financial Cryptography and Data Security, edited by Angelos D. Keromytis, 7397:41–56. Lecture Notes in Computer Science. Berlin, Heidelberg: Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-32946-3_4.

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See [mixer](mixer.md) and [AML](aml.md).
## References
* Orcutt, Mike. 2020. ‘This Is How North Korea Uses Cutting-Edge Crypto Money Laundering to Steal Millions’. MIT Technology Review. MIT Technology Review. http://www.technologyreview.com/2020/03/05/916688/north-korean-hackers-cryptocurrency-money-laundering/.
* Buttigieg, Christopher P., Christos Efthymiopoulos, Abigail Attard, and Samantha Cuyle. 2019. ‘Anti-Money Laundering Regulation of Crypto Assets in Europe’s Smallest Member State’. Law and Financial Markets Review 13 (4): 211–27. https://doi.org/10.1080/17521440.2019.1663996.
* Fanusie, Yaya, and Tom Robinson. 2018. ‘Bitcoin Laundering: An Analysis of Illicit Flows into Digital Currency Services’. Center on Sanctions and Illicit Finance Memorandum, January.
* Feinstein, Brian D., and Kevin Werbach. 2020. ‘The Impact of Cryptocurrency Regulation on Trading Markets’. SSRN Electronic Journal 7 (1): 48–99. https://doi.org/10.2139/ssrn.3649475.
* Ferreira, Agata. 2021. ‘The Curious Case of Stablecoins—Balancing Risks and Rewards?’ Journal of International Economic Law 24 (4): 755–78. https://doi.org/10.1093/jiel/jgab036.
* Fletcher, Emily, Charles Larkin, and Shaen Corbet. 2021. ‘Countering Money Laundering and Terrorist Financing: A Case for Bitcoin Regulation’. Research in International Business and Finance 56 (January): 101387. https://doi.org/10.1016/j.ribaf.2021.101387.
* Miscione, Gianluca, and Donncha Kavanagh. 2015. ‘Bitcoin and the Blockchain: A Coup d’Etat in Digital Heterotopia?’ SSRN Electronic Journal, no. 2006: 1–27. https://doi.org/10.2139/ssrn.2624922.
* Rae, Shaela W, and Lorraine Mastersmith. 2019. ‘Crypto Asset Trading in Canada: Entering a New Era of Regulation’. Banking & Finance Law Review 35 (1): 153–85.
* Renwick, Robin, and Rob Gleasure. 2021. ‘Those Who Control the Code Control the Rules: How Different Perspectives of Privacy Are Being Written into the Code of Blockchain Systems’. Journal of Information Technology 36 (1): 16–38. https://doi.org/10.1177/0268396220944406.
1. Orcutt, Mike. 2020. ‘This Is How North Korea Uses Cutting-Edge Crypto Money Laundering to Steal Millions’. MIT Technology Review. MIT Technology Review. http://www.technologyreview.com/2020/03/05/916688/north-korean-hackers-cryptocurrency-money-laundering/.
1. Buttigieg, Christopher P., Christos Efthymiopoulos, Abigail Attard, and Samantha Cuyle. 2019. ‘Anti-Money Laundering Regulation of Crypto Assets in Europe’s Smallest Member State’. Law and Financial Markets Review 13 (4): 211–27. https://doi.org/10.1080/17521440.2019.1663996.
1. Fanusie, Yaya, and Tom Robinson. 2018. ‘Bitcoin Laundering: An Analysis of Illicit Flows into Digital Currency Services’. Center on Sanctions and Illicit Finance Memorandum, January.
1. Feinstein, Brian D., and Kevin Werbach. 2020. ‘The Impact of Cryptocurrency Regulation on Trading Markets’. SSRN Electronic Journal 7 (1): 48–99. https://doi.org/10.2139/ssrn.3649475.
1. Ferreira, Agata. 2021. ‘The Curious Case of Stablecoins—Balancing Risks and Rewards?’ Journal of International Economic Law 24 (4): 755–78. https://doi.org/10.1093/jiel/jgab036.
1. Fletcher, Emily, Charles Larkin, and Shaen Corbet. 2021. ‘Countering Money Laundering and Terrorist Financing: A Case for Bitcoin Regulation’. Research in International Business and Finance 56 (January): 101387. https://doi.org/10.1016/j.ribaf.2021.101387.
1. Miscione, Gianluca, and Donncha Kavanagh. 2015. ‘Bitcoin and the Blockchain: A Coup d’Etat in Digital Heterotopia?’ SSRN Electronic Journal, no. 2006: 1–27. https://doi.org/10.2139/ssrn.2624922.
1. Rae, Shaela W, and Lorraine Mastersmith. 2019. ‘Crypto Asset Trading in Canada: Entering a New Era of Regulation’. Banking & Finance Law Review 35 (1): 153–85.
1. Renwick, Robin, and Rob Gleasure. 2021. ‘Those Who Control the Code Control the Rules: How Different Perspectives of Privacy Are Being Written into the Code of Blockchain Systems’. Journal of Information Technology 36 (1): 16–38. https://doi.org/10.1177/0268396220944406.

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Pre-mines have been criticised as an obscured form of [pump and dump](pump-and-dump.md) scheme.
A pre-mine is an posited solution to the [distribution problem](distribution-problem.md).
## References
* Livni, Ephrat, and Andrew Ross Sorkin. 2021. ‘The Dramatic Crash of a Buzzy Cryptocurrency Raises Eyebrows’. The New York Times, 28 June 2021, sec. Business. https://www.nytimes.com/2021/06/28/business/dealbook/icp-cryptocurrency-crash.html.
* Cornish, Chloe, and Richard Waters. 2018. ‘Silicon Valley Investors Line up to Back Telegram ICO’. Financial Times, January. https://www.ft.com/content/790d9506-0175-11e8-9650-9c0ad2d7c5b5.

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# Real Time Gross Settlement
Real time gross settlements (RTGS) systems are a type of database technology that domestic settlement and clearing systems are based on. RTGS systems are responsible for batching financial transactions between [bank](bank.md) or other financial institutions and netting out transactions between parties so that payments can be settled on a periodic or real-time basis.

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# Staking
In crypto assets, [staking](staking.md) is the act of time-locking [stablecoin](stablecoin.md) in a [smart-contracts](smart-contracts.md), typically with the promise of a yield or side payment of a [governance-token](governance-token.md) as a result of depositing the [cryptoassets](cryptoasset.md) with the third party.
This behaves somewhat like a [cd](cd.md) except the depository institution has no legal obligation to guarantees to custody funds or pay out said payments as it exists as a form of [regulatory-arbitrage](regulatory-arbitrage.md) outsde the regulatory perimeter.
Staking is a common building block in many so-called [DeFi](defi.md) protocols.
See also [counterparty risk](counterparty-risk.md), [bank run](bank-run.md), [Ponzi scheme](ponzi-scheme.md).
## References
1. Allen, Hilary J. 2022. ‘DeFi: Shadow Banking 2.0?’ William & Mary Law Review, Forthcoming.
1. Walch, Angela. 2019. ‘Deconstructing ‘Decentralization’: Exploring the Core Claim of Crypto Systems’. C. Brummer (Ed.), Crypto Assets: Legal and Monetary Perspectives, 1–36. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3326244.
1. Aramonte, Sirio, Wenqian Huang, and Andreas Schrimpf. 2021. ‘DeFi Risks and the Decentralisation Illusion’, 16.
1. Steele, Graham. 2021. ‘The Miner of Last Resort: Digital Currency, Shadow Money and the Role of the Central Bank’. Technology and Government, Emerald Studies in Media and Communications, Forthcoming.
1. Gorton, Gary B., and Jeffery Zhang. 2021. ‘Taming Wildcat Stablecoins’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3888752.
1. Bennet, Tomlin. n.d. ‘Tether and Bitfinex Introduction’. Accessed 2 March 2022. https://bennettftomlin.com/2021/08/08/tether-and-bitfinex-introduction/.
1. Krugman, Paul. 2018. ‘Transaction Costs and Tethers: Why I’m a Crypto Skeptic’. The New York Times 21.
1. Castor, Amy. 2021. ‘The Curious Case of Tether: A Complete Timeline of Events’. https://amycastor.com/2019/01/17/the-curious-case-of-tether-a-complete-timeline-of-events/.
1. Griffin, John M, and Amin Shams. 2020. ‘Is Bitcoin Really Untethered?’ The Journal of Finance 75 (4): 1913–64.
1. Brennecke, Martin, Benjamin Schellinger, Nils Urbach, and Tobias Guggenberger. 2022. ‘The De-Central Bank in Decentralized Finance: A Case Study of MakerDAO’. https://doi.org/10.24251/HICSS.2022.737.
1. Clements, Ryan. 2021. ‘Built to Fail: The Inherent Fragility of Algorithmic Stablecoins’. SSRN Electronic Journal 11: 131. https://doi.org/10.2139/ssrn.3952045.
1. Ferreira, Agata. 2021. ‘The Curious Case of Stablecoins—Balancing Risks and Rewards?’ Journal of International Economic Law 24 (4): 755–78. https://doi.org/10.1093/jiel/jgab036.
1. Malloy, Matthew, and David Lowe. 2021. ‘Global Stablecoins: Monetary Policy Implementation Considerations from the U.S. Perspective’. Finance and Economics Discussion Series 2021 (020): 1–14. https://doi.org/10.17016/feds.2021.020.
1. Mizrach, Bruce. 2021. ‘Stablecoins: Survivorship, Transactions Costs and Exchange Microstructure’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3835219.

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# Yield Farming
In crypto assets, *yield farming* is the act of taking [stablecoin](stablecoin.md) and depositing them with different [staking](staking.md) and [DeFi](defi.md) schemes with varying degrees of risk-yield promises in the hopes that diversification across different varieties of [Ponzi schemes](ponzi-scheme.md) will remove risk from an overall portfolio.
See also [CDs](cd.md).
See also [counterparty risk](counterparty-risk.md), [Ponzi scheme](ponzi-scheme.md) and [shadow banking](shadow-bank.md).
## References
## References
1. Allen, Hilary J. 2022. ‘DeFi: Shadow Banking 2.0?’ William & Mary Law Review, Forthcoming.
1. Walch, Angela. 2019. ‘Deconstructing ‘Decentralization’: Exploring the Core Claim of Crypto Systems’. C. Brummer (Ed.), Crypto Assets: Legal and Monetary Perspectives, 1–36. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3326244.

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- [x] [cd](../concepts/cd.md)
- [x] [commodity](../concepts/commodity.md)
- [x] [counterparty-risk](../concepts/counterparty-risk.md)
- [ ] [cross-bridges](../concepts/cross-bridges.md)
- [x] [cross-bridges](../concepts/cross-bridges.md)
- [x] [deposit](../concepts/deposit.md)
- [x] [deposit-insurance](../concepts/deposit-insurance.md)
- [ ] [dex](../concepts/dex.md)
- [x] [dex](../concepts/dex.md)
- [x] [exit-scam](../concepts/exit-scam.md)
- [x] [free-rider-problem](../concepts/free-rider-problem.md)
- [x] [bank](../concepts/bank.md)
@ -60,10 +60,10 @@ Second Pass
- [x] [private-key](../concepts/private-key.md)
- [x] [pyramid-scheme](../concepts/pyramid-scheme.md)
- [x] [mlm](../concepts/mlm.md)
- [ ] [rtgs](../concepts/rtgs.md)
- [ ] [staking](../concepts/staking.md)
- [x] [rtgs](../concepts/rtgs.md)
- [x] [staking](../concepts/staking.md)
- [x] [systemic-risk](../concepts/systemic-risk.md)
- [ ] [yield-farming](../concepts/yield-farming.md)
- [x] [yield-farming](../concepts/yield-farming.md)
- [x] [stablecoin](../concepts/stablecoin.md)
- [x] [capital-formation](../concepts/capital-formation.md)
- [x] [commercial-paper](../concepts/commercial-paper.md)
@ -82,7 +82,7 @@ Third pass
- [x] [broker](../concepts/broker.md)
- [x] [cds](../concepts/cds.md)
- [ ] [enclosure](../concepts/enclosure.md)
- [ ] [ficticious-commodity](../concepts/ficticious-commodity.md)
- [x] [ficticious-commodity](../concepts/ficticious-commodity.md)
- [x] [market-mania](../concepts/market-mania.md)
- [x] [price-risk](../concepts/price-risk.md)
- [x] [sanctions-enforcement](../concepts/sanctions-enforcement.md)
@ -102,9 +102,9 @@ Ideologies
Fourth Pass
- [ ] [liquidity-pool](../concepts/liquidity-pool.md)
- [ ] [cds](../concepts/cds.md)
- [ ] [cross-bridges](../concepts/cross-bridges.md)
- [ ] [staking](../concepts/staking.md)
- [x] [liquidity-pool](../concepts/liquidity-pool.md)
- [x] [cds](../concepts/cds.md)
- [x] [cross-bridges](../concepts/cross-bridges.md)
- [x] [staking](../concepts/staking.md)
- [ ] [technopopulism](../concepts/technopopulism.md)
- [ ] [yield-farming](../concepts/yield-farming.md)
- [x] [yield-farming](../concepts/yield-farming.md)