Abstract: The regulatory treatment of crypto-assets centers around the transparency and concentration of their decision-making process. We offer the first comprehensive analysis of Ethereum’s governance. We find that the introduction of EIPs is relatively concentrated (e.g. 10 individuals propose 68% of all Core EIPs), but discussion is broad, transparent, and open. The success of these proposals is associated with key attributes of the proposers, and the level of community engagement. We note a gradual decentralization trend, though the Ethereum Foundation remains influential. Importantly, governance decisions affect Ether prices, with a 12% increase observed prior to Core EIPs approval.
Christine Parlour, University of California-Berkeley
Marius Zoican, University of Calgary
Abstract: We investigate how liquidity providers (LPs) choose between high- and low-fee trading venues, in the face of a fixed common gas cost. Analyzing Uniswap data, we find that high-fee pools attract 58% of liquidity supply yet execute only 21% of volume. Large LPs dominate low-fee pools, frequently adjusting out-of-range positions in response to informed order flow. In contrast, small LPs converge to high-fee pools, accepting lower execution probabilities to mitigate adverse selection and liquidity management costs. Fragmented liquidity dominates a single-fee market, as it encourages more liquidity providers to enter the market, while fostering LP competition on the low-fee pool.
Discussant: Yu Yang, Singapore Management University
Daniel Ferreira, London School of Economics and Political Science
Jin Li, University of Hong Kong
Abstract: An organization is autonomous if it has the right or power of self-government. Self-government implies that autonomous organizations cannot rely on outside parties for contract enforcement; all contracts must be relational or self-executing. We present a model in which an autonomous organization commits to a governance structure that allocates managerial power to some of its members. We show that the organization faces a trilemma: the goals of autonomy, decentralization, and efficiency conflict with one another. Thus, the optimal governance structure of an autonomous organization is centralized. Centralization implies inequality in power and payoffs among members of autonomous organizations.
