scholarly journals Towards a Blockchain Contract-for-Difference Financial Instrument for Hedging Renewable Electricity Transactions.pdf

2020 ◽  
Author(s):  
Olakunle Alao ◽  
Paul Cuffe
Keyword(s):  
Electricity Markets ◽  
Cost Effective ◽  
Third Party ◽  
Financial Instruments ◽  
Renewable Electricity ◽  
Financial Instrument ◽  
Smart Contract ◽  
Expected Performance

Contract-for-Difference financial instruments are available to renewable electricity generators in day-ahead electricity markets to allow them to hedge against revenue risk. Traditional CfDs while designed to hedge revenue risk, introduce other new risks such as counterparty credit, margining and third-party risks. We therefore propose a novel financial instrument - an Ethereum blockchain-based dual escrow smart contract, to serve as the mediator in a CfD agreement between a renewable electricity generator and supplier. This financial instrument addresses hedging related risks that result from traditional CfD agreements in day-ahead electricity markets. In this paper, we design the logic of the financial instrument, translate this logic to smart contract codes and demonstrate its expected performance. Overall, the proposed financial instrument has the benefits of reducing hedging related risks inherent in traditional CfDs. Likewise, it enables secure, efficient, cost-effective, consistent, reliable, transparent and frictionless transactions between contracting parties in a CfD agreement.<br>

scholarly journals Towards a Blockchain Contract-for-Difference Financial Instrument for Hedging Renewable Electricity Transactions

2020 ◽  
Author(s):  
Olakunle Alao ◽  
Paul Cuffe
Keyword(s):  
Electricity Markets ◽  
Cost Effective ◽  
Third Party ◽  
Financial Instruments ◽  
Renewable Electricity ◽  
Financial Instrument ◽  
Smart Contract ◽  
Expected Performance

Contract-for-Difference financial instruments are available to renewable electricity generators in day-ahead electricity markets to allow them to hedge against revenue risk. Traditional CfDs while designed to hedge revenue risk, introduce other new risks such as counterparty credit, margining and third-party risks. We therefore propose a novel financial instrument - an Ethereum blockchain-based dual escrow smart contract, to serve as the mediator in a CfD agreement between a renewable electricity generator and supplier. This financial instrument addresses hedging related risks that result from traditional CfD agreements in day-ahead electricity markets. In this paper, we design the logic of the financial instrument, translate this logic to smart contract codes and demonstrate its expected performance. Overall, the proposed financial instrument has the benefits of reducing hedging related risks inherent in traditional CfDs. Likewise, it enables secure, efficient, cost-effective, consistent, reliable, transparent and frictionless transactions between contracting parties in a CfD agreement.<br>

scholarly journals Towards a Blockchain Contract-for-Difference Financial Instrument for Hedging Renewable Electricity Transactions

2020 ◽  
Author(s):  
Olakunle Alao ◽  
Paul Cuffe
Keyword(s):  
Electricity Markets ◽  
Cost Effective ◽  
Third Party ◽  
Financial Instruments ◽  
Renewable Electricity ◽  
Financial Instrument ◽  
Smart Contract ◽  
Expected Performance

Contract-for-Difference financial instruments are available to renewable electricity generators in day-ahead electricity markets to allow them to hedge against revenue risk. Traditional CfDs while designed to hedge revenue risk, introduce other new risks such as counterparty credit, margining and third-party risks. We therefore propose a novel financial instrument - an Ethereum blockchain-based dual escrow smart contract, to serve as the mediator in a CfD agreement between a renewable electricity generator and supplier. This financial instrument addresses hedging related risks that result from traditional CfD agreements in day-ahead electricity markets. In this paper, we design the logic of the financial instrument, translate this logic to smart contract codes and demonstrate its expected performance. Overall, the proposed financial instrument has the benefits of reducing hedging related risks inherent in traditional CfDs. Likewise, it enables secure, efficient, cost-effective, consistent, reliable, transparent and frictionless transactions between contracting parties in a CfD agreement.<br>

scholarly journals Structuring Contract-for-Difference Instruments for Hedging Electricity Price Risks on a Blockchain-based Marketplace

2021 ◽  
Author(s):  
Olakunle Alao ◽  
Paul Cuffe
Keyword(s):  
Electricity Markets ◽  
Financial Services ◽  
Third Party ◽  
Spot Price ◽  
Price Risk ◽  
Underlying Process ◽  
Smart Contract ◽  
Novel Approach ◽  
Contract Structure ◽  
Pool Market

The volatile nature of day-ahead electricity markets means that participants often resort to some form of derivative hedging instrument. One such derivative instrument is a Contract-for-Difference (CfD), specifically available to renewable generators in some jurisdictions to enable them to hedge against their price risk. CfD is a bilateral arrangement between a generator selling into, and an offtaker buying out of, a centrally cleared pool market for electricity. In this arrangement, the generator subsidizes the offtaker when the spot price is high; whereas, the offtaker subsidizes the generator when the spot price is low. This establishes a synthetic bilateral electricity transaction, operating in parallel to the pool market. Embracing CfD to hedge against price risk presents new risks such as counterparty credit, margining, third-party, and legal risks. They also incur high costs and possess underlying process risks. Decentralized Finance - an overarching term representing financial services built on top of a public blockchain - seems to present particularly compelling opportunities in electricity derivatives for these reasons. Therefore, we propose a novel Decentralized Finance instrument: a blockchain-based marketplace governed by a smart contract to act as a mediator between stakeholders mutually enrolled in bilateral CfD arrangements. The employed smart contract structure autonomously and irrefutably enforces the terms of the CfD, underpinned by a novel collateralization and settlement mechanism. This novel approach mitigates the hedging-related and underlying process risks of traditional CfD instruments.

Security tokens: architecture, smart contract applications and illustrations using SAFE

2019 ◽  
Vol 46 (6) ◽  
pp. 735-748 ◽  
Author(s):  
Hemang Subramanian
Keyword(s):  
Relational Algebra ◽  
State Transitions ◽  
Smart Contracts ◽  
Financial Instruments ◽  
Financial Instrument ◽  
Content Type ◽  
Advantages And Disadvantages ◽  
Smart Contract ◽  
First Time ◽  
Unique Mechanism

Purpose Blockchain technologies have pervaded modern crowdfunding and capital sourcing through a variety of financial instruments implemented as smart contracts. Smart contracts provide a unique mechanism not only to create a unique one-of-a-type financial instrument, but also to enable unique innovations atop existing financial instruments due to underlying efficiencies. The smartness comes from the flexibility that programs provide which can create extremely unique financial instruments that are often complex to implement, yet easy to create, maintain through versioning, trade and destroy. The purpose of this paper is to describe the security token architecture as an application of smart contracts. Further, the author illustrates the implementation and design of a commonly used financial instrument known as Simple Agreement for Future Equity (SAFE) using the security token architecture proposed and smart contract functionality. The author then models the transaction using relational algebra, and, models the utility maximization. The author shows how on account of reduced information asymmetry between the investors and SAFE users (i.e. startups) utility is positive when smart contract-based security tokens are deployed for each state in the SAFE contract. Design/methodology/approach Using an existing well-adopted instrument called a SAFE contract, the author illustrates the architecture of a smart contract-based security token system. The author illustrates how different components of a SAFE contract can be implemented as a smart contract and discusses the advantages and disadvantages of applying blockchain-based smart contracts to design SAFE instruments. The author deploys two methods: a state space diagram to explain state transitions and a utility model to explain the utilities. Findings The key findings of this research study are the design of a security token architecture, which can be used to convert any the physical or contract-based financial instrument to a smart contract that runs on the blockchain. However, there are limitations to the implementation of the same which can be overcome. The model illustrates the positive utilities derived for all economic actors, i.e. the contractors, the utility providers, etc., in the market. Originality/value This paper is an original paper. For the very first time, the author explored the architecture of a security token system. Using a well-known financial instrument, namely the SAFE, the author describes various components, e.g. the four contracts that form SAFE and then model the utilities for the system.

scholarly journals Structuring Contract-for-Difference Instruments for Hedging Electricity Price Risks on a Blockchain-based Marketplace

2021 ◽  
Author(s):  
Olakunle Alao ◽  
Paul Cuffe
Keyword(s):  
Electricity Markets ◽  
Financial Services ◽  
Third Party ◽  
Spot Price ◽  
Price Risk ◽  
Underlying Process ◽  
Smart Contract ◽  
Novel Approach ◽  
Contract Structure ◽  
Pool Market

The volatile nature of day-ahead electricity markets means that participants often resort to some form of derivative hedging instrument. One such derivative instrument is a Contract-for-Difference (CfD), specifically available to renewable generators in some jurisdictions to enable them to hedge against their price risk. CfD is a bilateral arrangement between a generator selling into, and an offtaker buying out of, a centrally cleared pool market for electricity. In this arrangement, the generator subsidizes the offtaker when the spot price is high; whereas, the offtaker subsidizes the generator when the spot price is low. This establishes a synthetic bilateral electricity transaction, operating in parallel to the pool market. Embracing CfD to hedge against price risk presents new risks such as counterparty credit, margining, third-party, and legal risks. They also incur high costs and possess underlying process risks. Decentralized Finance - an overarching term representing financial services built on top of a public blockchain - seems to present particularly compelling opportunities in electricity derivatives for these reasons. Therefore, we propose a novel Decentralized Finance instrument: a blockchain-based marketplace governed by a smart contract to act as a mediator between stakeholders mutually enrolled in bilateral CfD arrangements. The employed smart contract structure autonomously and irrefutably enforces the terms of the CfD, underpinned by a novel collateralization and settlement mechanism. This novel approach mitigates the hedging-related and underlying process risks of traditional CfD instruments.

The Potential Of Blockchain Technology To Change International Mobile Roaming Business Model

2019 ◽  
Vol 5 (1) ◽  
pp. 15-22
Author(s):  
Ardian Thresnantia Atmaja
Keyword(s):  
Business Model ◽  
Current Situation ◽  
Business Value ◽  
Third Party ◽  
Fundamental Aspect ◽  
Clearing House ◽  
Blockchain Technology ◽  
Smart Contract ◽  
Target Architecture ◽  
Architecture Development

The key objectives of this paper is to propose a design implementation of blockchain based on smart contract which have potential to change international mobile roaming business model by eliminating third-party data clearing house (DCH). The analysis method used comparative analysis between current situation and target architecture of international mobile roaming business that commonly used by TOGAF Architecture Development Method. The purposed design of implementation has validated the business value by using Total Cost of Ownership (TCO) calculation. This paper applies the TOGAF approach in order to address architecture gap to evaluate by the enhancement capability that required from these three fundamental aspect which are Business, Technology and Information. With the blockchain smart contract solution able to eliminate the intermediaries Data Clearing House system, which impacted to the business model of international mobile roaming with no more intermediaries fee for call data record (CDR) processing and open up for online billing and settlement among parties. In conclusion the business value of blockchain implementation in the international mobile roaming has been measured using TCO comparison between current situation and target architecture that impacted cost reduction of operational platform is 19%. With this information and understanding the blockchain technology has significant benefit in the international mobile roaming business.

Fostering Renewable Electricity Markets in North America

2007 ◽  
Author(s):  
Meredith Windgate ◽  
Jan Hamrin ◽  
Claudio Alatorre
Keyword(s):  
North America ◽  
Electricity Markets ◽  
Renewable Electricity

scholarly journals Research on Blockchain-Based E-Bidding System

2021 ◽  
Vol 11 (9) ◽  
pp. 4011
Author(s):  
Dan Wang ◽  
Jindong Zhao ◽  
Chunxiao Mu
Keyword(s):  
Data Transmission ◽  
Privacy Protection ◽  
Graph Isomorphism ◽  
Third Party ◽  
Business Logic ◽  
Core Concept ◽  
The Core ◽  
Blockchain Technology ◽  
Smart Contract ◽  
Bidding Process

In the field of modern bidding, electronic bidding leads a new trend of development, convenience and efficiency and other significant advantages effectively promote the reform and innovation of China’s bidding field. Nowadays, most systems require a strong and trusted third party to guarantee the integrity and security of the system. However, with the development of blockchain technology and the rise of privacy protection, researchers has begun to emphasize the core concept of decentralization. This paper introduces a decentralized electronic bidding system based on blockchain and smart contract. The system uses blockchain to replace the traditional database and uses chaincode to process business logic. In data interaction, encryption techniques such as zero-knowledge proof based on graph isomorphism are used to improve privacy protection, which improves the anonymity of participants, the privacy of data transmission, and the traceability and verifiable of data. Compared with other electronic bidding systems, this system is more secure and efficient, and has the nature of anonymous operation, which fully protects the privacy information in the bidding process.

scholarly journals Cost-effectiveness of a hybrid emergency room system for severe trauma: a health technology assessment from the perspective of the third-party payer in Japan

2021 ◽  
Vol 16 (1) ◽  
Author(s):  
Takahiro Kinoshita ◽  
Kensuke Moriwaki ◽  
Nao Hanaki ◽  
Tetsuhisa Kitamura ◽  
Kazuma Yamakawa ◽  
...  
Keyword(s):  
Cost Effectiveness ◽  
Emergency Room ◽  
Healthcare Costs ◽  
Cost Effective ◽  
Severe Trauma ◽  
Third Party ◽  
Trauma Patients ◽  
Short Term ◽  
The Third

Abstract Background Hybrid emergency room (ER) systems, consisting of an angiography-computed tomography (CT) machine in a trauma resuscitation room, are reported to be effective for reducing death from exsanguination in trauma patients. We aimed to investigate the cost-effectiveness of a hybrid ER system in severe trauma patients without severe traumatic brain injury (TBI). Methods We conducted a cost-utility analysis comparing the hybrid ER system to the conventional ER system from the perspective of the third-party healthcare payer in Japan. A short-term decision tree and a long-term Markov model using a lifetime time horizon were constructed to estimate quality-adjusted life years (QALYs) and associated lifetime healthcare costs. Short-term mortality and healthcare costs were derived from medical records and claims data in a tertiary care hospital with a hybrid ER. Long-term mortality and utilities were extrapolated from the literature. The willingness-to-pay threshold was set at $47,619 per QALY gained and the discount rate was 2%. Deterministic and probabilistic sensitivity analyses were conducted. Results The hybrid ER system was associated with a gain of 1.03 QALYs and an increment of $33,591 lifetime costs compared to the conventional ER system, resulting in an ICER of $32,522 per QALY gained. The ICER was lower than the willingness-to-pay threshold if the odds ratio of 28-day mortality was < 0.66. Probabilistic sensitivity analysis indicated that the hybrid ER system was cost-effective with a 79.3% probability. Conclusion The present study suggested that the hybrid ER system is a likely cost-effective strategy for treating severe trauma patients without severe TBI.

Sign in / Sign up

Export Citation Format

Share Document