Is decentralized finance actually decentralized? A social network analysis of the Aave protocol on the Ethereum blockchain


Luyao (Sunshine) Zhang

Date of Talk


Luyao (Sunshine) Zhang is Assistant Professor of Economics and Senior Research Scientist at the Data Science Research Center at Duke Kunshan University (DKU). Her current research interests are at the interplay of computational and economic science around the application of groundbreaking technologies, including artificial intelligence, blockchain and cryptography, and innovative computing. She has an abiding passion for interdisciplinary collaborations, especially for cutting-edge research of both profound insights and practical impacts, including computational economics and social science, crypto and token economics, behavioral and experimental economics, explainable and cooperative AI, and interdisciplinary big data. Her publications appear in economic and computational science journals and conference proceedings for general interest and beyond, including American Economic Review: Papers and Proceedings, the Review of Economics and Statistics, the World Economy, Nature Research Scientific Data, Springer Nature Social Indicators Research, Springer Nature Eastern Economic Journal, ACM CCS, AAAI/ACM AIES, Computing Conference, IEEE International Conference on Blockchain Proceedings, Remote Sensing, Journal of Digital Earth, Data and Information Management. She received Ph.D. in Economics at Ohio State University, supported by Presidential Fellowship and the National Science Foundation (NSF). She graduated from Peking University with a B.A. in Economics and a B.S. in Math and Applied Math. She holds certificates from the Blockchain Strategy program at Oxford University and Blockchain: Disruptive Technology program from MIT professional education and over 30 data science certificates. She is currently supported by the National Science Foundation in China for her research agenda entitled “Trust Mechanism Design on Blockchain: An Interdisciplinary Approach of Game Theory, Reinforcement Learning, and Human-AI Interactions.” She was awarded the 60 Pioneers in Blockchain Innovation by the National Collegiate Artificial Intelligence and Big Data Innovation Alliance in 2022. She also won the Kunshan Shortage Talent Program in 2023 for her exceptional achievements in highly sought-after talents of scarcity. Beyond academics, she is also the Founding President of SciEcon CIC, a not-for-profit organization based in the U.K., aiming to cultivate integrated talents and interdisciplinary research. She has also jointly led research and developer grant projects with blockchain pioneers in both academia and industry, supported by the Ethereum Foundation, Dfinity Foundation, Primitive Lane, and so forth. Know more about her at


Decentralized finance (DeFi) has the potential to disrupt centralized finance by validating peer-to-peer transactions through tamper-proof smart contracts and thus significantly lowering the transaction cost charged by financial intermediaries. However, the actual realization of peer-to-peer transactions and the levels and effects of decentralization are largely unknown. Our research pioneers a blockchain network study that applies social network analysis to measure the level, dynamics, and impacts of decentralization in DeFi token transactions on the Ethereum blockchain. First, we find a significant core-periphery structure in the AAVE token transaction network, where the cores include the two largest centralized crypto exchanges. Second, we provide evidence that multiple network features consistently characterize decentralization dynamics. Finally, we document that a more decentralized network significantly predicts a higher return and lower volatility of the DeFi tokens. We point out that our approach is seminal for inspiring future extensions related to the facets of application scenarios, research questions, and methodologies on the mechanics of blockchain decentralization.

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First Nations land acknowledegement

We acknowledge that the UBC Point Grey campus is situated on the traditional, ancestral, and unceded territory of the xʷməθkʷəy̓əm.

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