Peter Carr Brooklyn Quant Experience (BQE) Seminar Series: Luyao Zhang

Lecture / Panel
For NYU Community

Peter Carr BQE Seminar Series


A Systemization of Knowledge (SoK): Blockchain Decentralization and Implications for Tokeneconomy


Blockchain empowers a decentralized economy by enabling distributed trust in a peer-to-peer network. However, surprisingly, a widely accepted definition or measurement of decentralization is still lacking. We explore a systematization of knowledge (SoK) on blockchain decentralization by reviewing existing studies on various aspects of blockchain decentralization. First, we establish a taxonomy for analyzing blockchain decentralization in the five facets of consensus, network, governance, wealth, and transaction. We find a lack of research on the transaction aspects that closely characterize user behavior. Second, we apply Shannon entropy in information theory to propose a decentralization index for blockchain transactions. We show that our index intuitively measures levels of decentralization in peer-to-peer transactions by simulating blockchain token transfers. Third, we apply our index to empirically analyze the dynamics of Decentralized Finance (DeFi) token transfers. Intertemporally, we observe that levels of decentralization converge regardless of the initial levels of decentralization. Comparison of DeFi applications shows that exchange and lending are more decentralized than payment and derivatives. We also discover that a greater return of ether, the native coin of the Ethereum blockchain, predicts a greater decentralization level in stablecoin transfer that includes ether as collateral. Finally, we develop future research directions to explore the interactions between different facets of blockchain decentralization, the design of blockchain mechanisms that achieve sustainable decentralization, and the interplay of decentralization levels and economic factors.


Luyao (Sunshine) Zhang is an Assistant Professor of Economics and Senior Research Scientist at the Data Science Research Center at Duke Kunshan University (DKU). She has an abiding passion for interdisciplinary collaborations, especially for cutting-edge research of both profound insights and practical impacts, including Computational Economics (Algorithmic Game Theory and Mechanism Design), Artificial Intelligence (Machine Learning, AI Trust, Human-Computer Interaction), Cryptoeconomics (Blockchain for social good, Consensus Algorithms, DeFi), Behavioral Science (Bounded Rationality, Trust, and Cooperation), and Interdisciplinary Big Data (Social Media, Sustainability, and Global Health). Her current research interests are around the application scenarios of “Blockchain +.” Her publications appear in economic journals for general interest and beyond, including American Economic Review: Papers and Proceedings, the Review of Economics and Statistics, the World Economy, Nature Scientific Data, Nature Social Indicators Research, ACM CCS, AAAI/ACM AIES, Remote Sensing, Journal of Digital Earth, Data and Information Management, etc. She received Ph.D. in Economics at Ohio State University, supported by Presidential Fellowship and NSF dissertation grant. She graduated from Peking University with a B.A. in Economics and a B.S. in Math and Applied Math.  She holds a blockchain strategy certificate at Oxford University and more than 30 data science certificates. She is also leading multiple initiatives in innovative education, entrepreneurship of social impacts, and global leadership.  She is the Founding President for SciEcon CIC, NPO registered in the UK, aiming to cultivate integrated talents in research, innovation, and leadership for cutting-edge interdisciplinary research of both profound insights and practical impacts, the Associate Editor for IEEE Transactions on Computational Social System. She also leads two Ethereum Academic Grant projects with the Co-PI professor in computer science and blockchain pioneer in the industry.

Know more about her on the duke scholar page: