A systemic boundary defines the perimeter within which a particular system operates, encompassing its components, interactions, and external interfaces. In financial systems, this boundary delineates the scope of interconnected institutions and markets whose failure could trigger broader instability. For digital assets, identifying the systemic boundary involves determining which crypto entities or protocols are large and interconnected enough to pose a risk to the wider financial system if they fail. This assessment is critical for regulatory oversight.
Context
Defining the systemic boundary for digital assets is a major challenge for financial regulators globally, given the novel architecture and rapid growth of the crypto market. Discussions center on identifying key interdependencies between traditional finance and digital asset markets, as well as among different crypto protocols. Future developments will involve refining methodologies for assessing systemic risk in the digital asset ecosystem and establishing appropriate regulatory responses to prevent contagion. This analysis is crucial for financial stability.
Foundational mechanism design proves no deterministic transaction fee auction can simultaneously ensure user truthfulness, miner revenue, and collusion resistance.
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