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.

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.

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 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>

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.

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.

Trust but Verify: The Oracle Paradox of Blockchain Smart Contracts

2021 ◽  
Author(s):  
Abdullah Albizri ◽  
Deniz Appelbaum
Keyword(s):  
Internal Control ◽  
Process Management ◽  
Weak Link ◽  
Design Science ◽  
Science Research ◽  
Third Party ◽  
Smart Contracts ◽  
Independent Verification ◽  
Smart Contract ◽  
Control Application

Although research shows that blockchain provides fairly immutable virtual provenance workflows, proof that the Blockchain accurately represents physical events lacks truly independent verification. This dilemma, the Oracle Paradox, challenges blockchain architecture and is perhaps one reason why businesses have hesitated to adopt smart contracts. Blockchain proponents claim that people can serve as trusted Oracles in a smart contract. However, auditing research shows that people are the weak link in almost every internal control application, including those pertaining to blockchain. People are susceptible to collusion, bribery, error, and fraud and these tendencies are not entirely mitigated by blockchain technologies (Balagurusamy et al. 2019; Nakamoto 2008). This research proposes a framework to mitigate the paradox of the Oracle: A Business Process Management (BPM) model of a Blockchain Smart Contract-enabled Supply Chain with IoT as the sole "third-party" Oracle participant, utilizing Design Science research.

scholarly journals Cyber-physical networking for wireless mesh infrastructures

2012 ◽  
Vol 10 ◽  
pp. 113-118
Author(s):  
C. Mannweiler ◽  
C. Lottermann ◽  
A. Klein ◽  
J. Schneider ◽  
H. D. Schotten
Keyword(s):  
Network Control ◽  
Third Party ◽  
Mesh Network ◽  
Control Mechanisms ◽  
Autonomous Operation ◽  
Delay Jitter ◽  
Wireless Mesh ◽  
Novel Approach ◽  
Inference Systems ◽  
Management Functions

Abstract. This paper presents a novel approach for cyber-physical network control. "Cyber-physical" refers to the inclusion of different parameters and information sources, ranging from physical sensors (e.g. energy, temperature, light) to conventional network information (bandwidth, delay, jitter, etc.) to logical data providers (inference systems, user profiles, spectrum usage databases). For a consistent processing, collected data is represented in a uniform way, analyzed, and provided to dedicated network management functions and network services, both internally and, through an according API, to third party services. Specifically, in this work, we outline the design of sophisticated energy management functionalities for a hybrid wireless mesh network (WLAN for both backhaul traffic and access, GSM for access only), disposing of autonomous energy supply, in this case solar power. Energy consumption is optimized under the presumption of fluctuating power availability and considerable storage constraints, thus influencing, among others, handover and routing decisions. Moreover, advanced situation-aware auto-configuration and self-adaptation mechanisms are introduced for an autonomous operation of the network. The overall objective is to deploy a robust wireless access and backbone infrastructure with minimal operational cost and effective, cyber-physical control mechanisms, especially dedicated for rural or developing regions.

scholarly journals Financial literacy of students of technical universities: analysis of opinions and development prospects

2021 ◽  
Vol 49 (1) ◽  
pp. 80-91
Author(s):  
Olga V. Stepnova ◽  
◽  
Irina Yu. Starchikova ◽  
Keyword(s):  
Financial Literacy ◽  
Financial Services ◽  
Research University ◽  
Educational Process ◽  
Third Party ◽  
Positive Trend ◽  
Full Time ◽  
Moscow Aviation Institute ◽  
Technical University ◽  
Financial Issues

Introduction. The development of students' ability to make informed and responsible decisions in the field of personal finance is an urgent problem. Young people must have the appropriate competencies, have the required level of financial literacy. This also applies to students of non-economic areas of training, in particular students of technical specialties. The purpose of the study is to analyze the financial literacy of students of a technical university. Materials and methods. The material of the research was the data of an anonymous sociological survey of 100 students of Stupino branch of Moscow Aviation Institute (National Research University) of the 3rd and 4th courses of full-time education by filling in Google forms. Results. Analysis of students' opinions showed a positive trend (65% of respondents) for the introduction of financial literacy in the educational process of a technical university. Students admitted (54% of respondents) that they are not aware of all kinds of risks when investing in NPFs, when buying a home, compulsory motor third party liability insurance, taking a loan, when calculating wages, etc. Based on the students' answers, it was found that 62% of the respondents had no experience in solving financial issues. At the same time, 67% of students are not interested in rates on deposits, loans, the key rate of the Central Bank, but daily use the financial services of the bank (plastic cards, payment for services via the Internet, e-wallet, etc.) 97% of students. Conclusion. Today, the financial literacy of the population is fraught with many vital issues and affects the effectiveness of decisions made and the associated risks.

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