Platform Commitment, Perpetual Instrument Design, and Decentralized Value Allocation for Tokenized Equity Access
Application to Ethereum Foundation PhD Fellowship -- RFP: Economic Models Enabled by Decentralized Trust Systems
Centralized equity markets operate on fixed schedules under the discretionary control of platform operators who can unilaterally alter fees, access rules, and value-sharing arrangements. This creates well-documented commitment failures: traders, liquidity providers, and third-party integrators who make relationship-specific investments face hold-up risk because the platform retains residual control.
Ethereum provides the composability, public verifiability, smart-contract durability, and credibly neutral interface layer needed for these participants to make such investments without fear of ex-post platform discretion. No single centralized operator can replicate these properties without reintroducing discretionary trust assumptions.
This project develops a formal economic and computational framework for equity-linked perpetuals on Ethereum, combining incomplete-contract theory, platform economics, and dynamic mean-field market microstructure to identify the conditions under which decentralized commitment improves participation, liquidity, and welfare.
| Development | Signal |
|---|---|
| BlackRock BUIDL fund | Surpassed $1B AUM within about one year of its March 2024 Ethereum launch |
| Robinhood tokenized stocks | Launched for EU users, initially using Arbitrum-based infrastructure |
| DTCC no-action letter | SEC staff granted time-limited no-action relief for DTC's preliminary tokenization service |
| Cboe 24x5 filing | Filed with the SEC to launch near 24x5 U.S. equities trading on EDGX |
| SEC staff statement (Jan. 30, 2026) | Outlined a two-part taxonomy: issuer-tokenized and third-party tokenized securities |
| ID | Question |
|---|---|
| Q1 | When does decentralized trust increase participation and liquidity enough to outweigh additional on-chain frictions? |
| Q2 | When do equity-linked perpetuals dominate spot tokenization as the most scalable form of 24/7 equity exposure? |
| Q3 | How should trading revenues and control rights be allocated so that the market remains open, composable, and resistant to rent extraction? |
Hypotheses:
- H1. Credibly neutral fee and access commitments increase third-party liquidity provision and reduce rent extraction relative to centralized extended-hours platforms.
- H2. Equity-linked perpetuals are a more scalable form of 24/7 global equity exposure than spot-token wrappers in settings where corporate-action and register-management frictions are material.
- H3. A hybrid design combining continuous trading with event-sensitive auction windows produces better price-discovery efficiency and lower adverse-selection costs than pure continuous trading during low-liquidity hours.
The project proceeds in four linked workstreams that build progressively from institutional theory to computational modeling to empirical validation.
WS1 Organizational Model Incomplete contracts (Grossman-Hart-Moore) + platform economics
|
WS2 Instrument Design Spot tokens vs. equity-linked perpetuals (contract theory)
|
WS3 Dynamic Microstructure Multi-population mean-field game model
|
WS4 Empirical Calibration After-hours equity, crypto perps, on-chain tokenized equity
The model includes six agent classes: global directional traders, passive/active liquidity providers, market makers, front-end operators, oracle/attestation providers, and protocol maintainers.
Planned datasets:
| Source | Data | Access |
|---|---|---|
| NYSE TAQ (WRDS) | After-hours bid-ask spreads, depth, trade counts, price impact | USC institutional subscription |
| Binance & dYdX | Funding rates, basis, order-book snapshots, liquidation events | Public REST & WebSocket APIs |
| Arbitrum / Etherscan | Robinhood tokenized stock transactions, Kraken xStocks (Backed Finance) | Dune Analytics, on-chain |
| Output | Description |
|---|---|
| Theoretical model | Centralized vs. decentralized equity market organization under incomplete contracting |
| MFG microstructure model | Dynamic mean-field game of traders, LPs, MMs, and arbitrageurs in 24/7 equity markets |
| Mechanism-design blueprint | Credibly neutral value allocation and liquidity incentives |
| Academic paper | Submission to a leading venue in financial economics, blockchain, or market design |
| Open-source code | Simulation and calibration codebase (this repository) |
| Design memo | Practitioner-facing document for Ethereum builders and policymakers |
| Milestone | Months | Focus |
|---|---|---|
| MS1 -- Literature & Data | 1--3 | Structured literature review, institutional case studies, data pipeline construction |
| MS2 -- Formal Model | 3--6 | Incomplete-contracts + platform-design model, threshold conditions, welfare results |
| MS3 -- Computational Model | 6--10 | Multi-population MFG implementation, calibration, counterfactual experiments |
| MS4 -- Dissemination | 10--12 | Paper submission, open-source release, design memo, community presentation |
-
H. Mohanty and B. Krishnamachari, "Who Restores the Peg? A Mean-Field Game Approach to Model Stablecoin Market Dynamics," arXiv:2601.18991, 2026. Accepted at IEEE ICBC 2026. [arXiv]
-
H. Mohanty, G. Zaarour, and B. Krishnamachari, "Proactive Market Making and Liquidity Analysis for Everlasting Options in DeFi Ecosystems," IEEE ICBC 2025. [DOI]
-
Z. Feng, H. Mohanty, and B. Krishnamachari, "Modeling and Analysis of Crypto-Backed Over-Collateralized Stable Derivatives in DeFi," Frontiers in Blockchain, vol. 7, 2024. [DOI]
This project is licensed under the MIT License.