Autonomous Governance & Risk Management in New Financial Ecosystems

Exploring the intersection of autonomous governance, risk management, and emerging financial paradigms like DAO, DeFi, and MetaFi, this showcase delves into the pressing need for new institutions in the Web3 landscape. Through the lens of institutional economics and the evolving rule of law, the presentation highlights the significance of governance models in shaping economic productivity and reducing transaction costs in modern markets. Join Gurvinder Ahluwalia and Vipin Bharathan in their insightful journey through the challenges and opportunities in redefining governance frameworks for the digital age.

• Governance
• Risk Management
• DeFi
• Institutional Economics
• Web3

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1. Call for Proposals 2022 Award Showcase University College London, Feb 13, 2023 Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Gurvinder S. Ahluwalia Vipin Bharathan Founder & Full Stack Developer, dlt.nyc New York City, NY, USA Founder & CEO, Digital Twin Labs, Inc. Dallas, TX, USA UCL Industry Associate Co-Researcher UCL Industry Associate Principal Researcher & Lead vip@dlt.nyc | @vipinbharathan guri@digitaltwinlabs.com | @guriahluwalia

2. 2 We Are Grateful To UCL CBT For The Award Of A Grant Under Call For Proposals 2022 Which Helped Make This Work Possible - Thank You! Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

3. 3 Agenda & Flow 1. Research Focus -Problem Space 2. Institutional Economics -the future of institutions 3. Slow & Fast Risk 4. Autonomous Governance & Risk Management 5. Summary: Our contribution and Application to the Industry Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

4. 4 1. Research Focus -Problem Space Problem Space New Institutions in Web3 need to advance the rule of law Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

5. 5 2. Institutional Economics New Institutional Economics Institutions are The Rules of the game More mature institutions improve economic productivity Transaction costs are a measure of Institutions maturity Governance matters (Washington Consensus) End point theory Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

6. 6 2. Institutional Economics Decreasing Transaction Costs Prehistory Long Distance Trading Modern Markets Trading-Souk Industrial Revolution Increasing Rule of Law Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

7. 7 2. Institutional Economics Decreasing Transaction Costs Prehistory Long Distance Trading Modern Markets Trading-Souk Industrial Revolution DAOs Increasing Rule of Law Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

8. 8 2. Institutional Economics Decreasing Transaction Costs Prehistory Long Distance Trading Modern Markets DAOs Souk Industrial Revolution Increasing Rule of Law Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

9. 9 2. Institutional Economics New Institutional Economics for Web3 Institutions are The Rules of the game More mature institutions improve economic productivity Transaction costs are a measure of Institutions maturity Governance matters (Washington Consensus) End point theory-has to be modified Strengthen rule of law by building on code is law Build atop conventional risk management methods Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

10. 10 3. Slow & Fast Risk Fast Risk Slow Risk Governance Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

11. 11 3. Slow & Fast Risk Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

12. 12 3. Slow & Fast Risk Liquidity the ability to trade big size, quickly, at low cost, when desired Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

13. 13 3. Slow & Fast Risk Measures of Liquidity Depth Transaction Cost Price (Bid-Ask spread) Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

14. 14 4. Autonomous Governance & Risk Management Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

15. 15 4. Autonomous Governance & Risk Management Conventional Risk Management Practices 1. Liquidity Restoration Points such as circuit breakers. 2. Defending liquidity using DOLR. 3. Deposit Insurance 4. The Greeks 5. Telemetry Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

16. 16 4. Autonomous Governance & Risk Management Liquidity Restoration Points Circuit breaker: Trading is halted for a given time when price falls or rises by an unusualamount. Price Limits: Trading is not halted, but only trades that fall in a certain price range are executed. Rate slowdowns: Automated trading and matching algorithms slow down to decrease the trading activity. Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

17. 17 4. Autonomous Governance & Risk Management Telemetry & Control Risk Management UX Web apps Wallets and APIs DAOs, DeFi (DEX, Lend, Derivatives etc.) The Metaverse Logic Callable Asset Fungible Fraction Tokens Base Immutable Ordered Ledger/Blockchain The DAO Stack + Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

18. 18 4. Autonomous Governance & Risk Management Telemetry & Control SYSTEMIC Risk Management The DAO Stack ++ Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

19. 4. Autonomous Governance & Risk Management Risk Management Practices updated for Web3 1. Liquidity Restoration Points such as circuit breakers. 2. Defending liquidity using DDOLR. 3. Deposit Insurance 4. The Greeks 5. Telemetry-The Graph 6. Dissimilar Redundancy in Smart Contracts 19

20. 20 5. Our Contributions & Application to Industry Our Contributions 1. Situate DAOs in the evolution of new institutionaleconomics 2. Establish that RiskManagement is needed for the rule of law 3. Establish that autonomous governance &riskmanagement is needed for DAOs 4. Create an architecturalmodel for riskmanaged DAOs 5. Reuse and extend conventional riskmanagement methods for DAOs 6. Engineering suggestions for implementing such a system Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan

21. 21 Q&A Autonomous Governance & Risk Management Enterprises, DAO, DeFi, MetaFi, TradFi Call for Proposals 2022 Award Showcase Gurvinder Ahluwalia & Vipin Bharathan