1. Ongoing Research on Machine Learning application in global financial markets (2024 - present).

2. "Ethereum Blockchain: Economic Failure of Proof-of-Stake Consensus Mechanism",  DOI: 10.13140/RG.2.2.31642.15040. It's the result of one of my research conducted in 2023-2024. 

 "Ethereum Blockchain: Economic Failure of Proof-of-Stake Consensus Mechanism"

Olga D. Khon

March 2024

Extended Abstract

Blockchain proliferation is controversial but nearly indisputable in academic research. Pro-blockchain economists ignore immense market inefficiencies, infrastructural blockchain limitations, and functional exploitations incorporated in crypto assets. Despite a solid case of worsening social inequality and enhancing illicit finance, blockchain proponents massively represent the field as an innovative path for apparent democratization in the global financial system. This positive misrepresentation relies on a broader theoretical generalisation of underlying functionality that neglects crucial technical details and practical implications of modern blockchain networks. 

To fill the gap, we pivotally delve into the architectural design and empirical performance of the Ethereum blockchain. Our comprehensive approach unveils drastic infrastructural drawbacks given the operability of globally dispersed nodes’ networks under distributed ledger technology (DLT). Based on empirical data since the origination of the Ethereum blockchain (2015-2023), we emphasize an economic failure of the Proof-of-Stake (PoS) consensus mechanism and threats to financial compliance within the Ethereum Virtual Machine (EVM). In addition, we underpin designed tricks of smart contracts along with technical code execution as a background for cross-border programmable illicit finance and money laundering. It refers to the case of Ethereum Mainnet’s public ledger that solely stores transactions of the native token Ether (ETH). Whilst transfers of smart contracts’ derivative tokens (incl. an ERC-20 version of ETH-wrapped ETH or WETH) are not broadcasted to the ledger and remain concealed. The growing smart contracts activity inevitably diminishes the informational value of distributed ledger records.

Through the evidence of Ethereum's operability, we underline an intentional exploitation of multi-level information asymmetry. It derives from an incentivization model incorporated into blockchain consensus mechanism design that operates on economic incentives in the form of regular block rewards and transaction “gas” fees. Herein the burden of gas fees differs for separate Ethereum blockchain accounts. The Contract accounts (CAs) receive upper bound benefits in transaction costs and execution speed in regards to externally owned accounts (EOAs). We point out the gas fee as a major proxy for information asymmetry on the Ethereum blockchain and its shadow satellite ecosystem. Since the gas fee is unified for standardized transactions of any amount included, it primarily depends on transactional demand and blockchain throughput in the block production process. Therefore, the design of gas fees apriori serves to boost social inequality and amplify market manipulations over capital concentration. 

Given the blockchain functionality and disproportional block data propagation, in our paper we distinguish blockchain participants into two aggregate groups: 1) infrastructural representatives (blockchain nodes); and 2) payment users (initiators and recipients of transactions). We analyse the distribution inequality of participant rights within each group and their intersection. Herewith core blockchain developers and originators under the framework of the Ethereum Foundation represent an ultimate form of both payment users and infrastructural representatives. On the one hand, they depict the biggest crypto asset holders (“crypto whales'') due to initial token distribution and following reward accumulation and embody the issue of high capital concentration and market dominance. On the other hand, the Ethereum Foundation possesses unlimited access to full data stored on and transmitted through the Ethereum Virtual Machine (EVM). The latter leads to an inevitable consumer data breach by the Ethereum Foundation beyond any user consent and business confidentiality agreements. 

According to our study, blockchain developers and originators depict the top level of data access among infrastructural representatives, above institutional- and individual-type of block producers. It reflects our formulated trifecta of information asymmetry within block producers throughout the Ethereum ecosystem.

The scope of access to pending transactions’ data is a critical discrepancy on blockchain. Since it provides complete information on demand and supply for tokens along with trades awaiting execution in the next units of time (block time slots). In other words, it determines future token prices and enables manipulation with price trends and maximal extractable value (MEV). Thus, given the full access and capital concentration of the Ethereum Foundation, to them price volatility of tokens is not a probabilistic forecast but a certain outcome. Notably, it undermines any theoretical assumptions on horizontal demand curves for blockchain tokens where particular players are well-assured of their discrete influence on market prices.

This study dives into the major concepts of the modern blockchain. It reveals the functional discrepancies between theoretical claims of innovation and empirical evidence of architectural failure and hidden crime incentives. Above all, the infected field of blockchain-minted crypto assets spurs human primitive and basic instincts (greed and money addiction), intensifies illicit finance (including money laundering, sanction evasion, tax avoidance, human trafficking and large-scale corruption), while artfully manipulating the general public.
 

Keywords: Information Asymmetry; Market Inefficiency; Ethereum Blockchain; Proof-of-Stake; Consensus Mechanism; Crypto Assets;  Smart Contracts; Distributed Ledger Technology.

JEL Classification: G10, G15, G20, G23.

Check the full text as a PDF file

1. Olga D. Khon, 2022. "The Montage of Attractions" in Crypto Ecosystem: From Zero Intrinsic Value to a Bubble Price", Proceedings of Economics and Finance Conferences 13015565, International  Institute of Social and Economic Sciences. DOI 10.20472/EFC.2022.016.008 

Available at https://ideas.repec.org/p/sek/iefpro/13015565.html

2. Olga D. Khon, 2020. "Money Demand: The Guide to Monetary Policy in Russia, 1997- 2020", Proceedings of Economics and Finance Conferences 11113164, International Institute of Social and Economic Sciences. DOI 10.20472/IAC.2020.055.009 

Available at https://ideas.repec.org/p/sek/iacpro/11113164.html

3. Olga D. Khon, Chernenko V.A., 2019. "Collateral Adequacy and Lender’s Overconfidence", Izvestiya of Saint Petersburg State University of Economics, pp.39-45. 

4. Olga D. Khon, 2018. "Collateral Determinants in Bank Loans: The Conductor of Credit Risks' Polyphony", Proceedings of GSOM Emerging Markets Conference 2018, pp. 256-258. 

5. Olga D. Khon, Karminsky A.M., 2018. "Collateral Determinants in Bank Risk Management: The Regional Case", MGIMO Review of 

International Relations, pp. 169-185. DOI: https://doi.org/10.24833/2071-8160-2018-1-58-169-185

6. Olga D. Khon, Karminsky A.M., 2018. "Collateral Adequacy as an Adjusted Financial Covenant in Bank Loans", Finance and credit, pp. 1449-1468. DOI: https://doi.org/10.24891/df.26.1.83

7. Olga D. Khon, Sigova M.V., 2017. "Digital Banking in Russia: The Mainstream of Fintech", Proceedings of the International Banking Institute, pp.44-55.

2026

- Bank of England and UK Women in Economics Annual Networking Event "Expanding, Diversifying and Developing the Talent Pool in Economics" (Bank of England, UK WEN, London, 26 February 2026, hybrid: in-person & virtual registration). Status: Attendee.

2025

- Data Visualization and Data Labelling For Machine Learning Applications - Workshop with Nesta (Nesta, Economic Statements Center of Excellence - ESCoE, King’s College London, London, 20 May 2025, in-person). Status: Participant.

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2022

- The 5th International Conference of Development and Economy (University of Peloponnese, Greece, 21-23 October 2022). Status: Participant. Report: "A Close-Up Look on Terra’s Crash in 2022". 

- IISES Economics & Finance Conference (International Institute of Social and Economic Sciences, Prague, Czech Republic, 13-15 June 2022). Status: Participant. Report: "The Montage of Attractions" in Crypto Ecosystem: From Zero Intrinsic Value to a Bubble Price" (Paper published in the Conference Proceedings). 

- Virtual Seminar Series on Central Banking and Digital Currencies: “The Coming Battle of Digital Currencies" by Simon Mayer (Booth School of Business) (CEBRA, US, 20 May 2022 - held virtually). Status: Attendee. 

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2021

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- Hagen Workshop on Global Economic Studies (FernUniversität in Hagen, Germany, 25-26 May 2021 – held virtually). Status: Attendee. 

- Vienna Workshop on Econometrics of Option Markets (Vienna, Austria, April 19-21, 2021– held virtually). Status: Attendee. 

- The Annual Conference of the Royal Economic Society (University of Bristol, UK, April 12- 14, 2021– held virtually). Status: Member, Attendee. 2020

- IISES Vienna International Academic Conference (Vienna, Austria, September 1, 2020 – held virtually). Status: Participant; Best Paper Award (link: https://www.iises.net/past- conferences/academic/2020-international-academic-conference-vienna/page-best-paper-award-iiac). 

Report: "Money Demand: The Guide to Monetary Policy in Russia, 1997-2020". (Paper published in the Conference Proceedings). 

- The 2020 World Congress of the Econometric Society (Milan, Italy – held virtually). Status: Attendee. 

2018

- The second Ghent Russia colloquium: Russia's political economy since 1992: Back to the future? (Ghent University, Ghent, Belgium). Status: Participant. Report: "Collateral Determinants in Bank Loans: The Driver of Systemic Risks in Russia" 

- XIX April International Academic Conference On Economic and Social Development (Higher School of Economics, Moscow, Russia). Status: Participant and Discussant. Report: "Collateral Adequacy As An Indicator of Certainty in Banking" 

- GSOM Emerging Markets Conference 2018 (SPbSU Graduate School of Management, Saint Petersburg, Russia). Status: Participant. Report: Collateral Determinants in Bank Loans: "The Conductor of Credit Risks' Polyphony" 

2017

- Yale Program on Financial Stability Conference «Fighting the Financial Crisis» (Yale School of Management, New Haven, USA). Status: Attendee. 

- XVIII April International Academic Conference on Economic and Social Development (Higher School of Economics, Moscow, Russia). Status: Participant. Report: "Certainty Indices on Financial Markets"

- GSOM Emerging Markets Conference 2017 (SPbSU Graduate School of Management, Saint Petersburg, Russia). Status: Session Chair and Participant. Report: "Interest Rates in Russia: The Interference of Regulator to the Market"

- Second World Congress of Comparative Economics «1917 –2017: Revolution and Evolution in Economic Development» (Higher School of Economics, Saint Petersburg, Russia). Status: Participant. Report: "Bank of Russia's Key Rate: Between Scylla and Charybdis"

- International BRICS Global Business and Innovation Conference (Higher School of Economics, Saint Petersburg, Russia). Status: Participant. Report: "The Ambivalence of Interest Rates on Russian Financial Market"

2016

- GSOM Emerging Markets Conference-2016 (SPbSU Graduate School of Management, Saint Petersburg, Russia). Status: Participant. Report: "Markets Record High: The Case of Speculative Bubbles"

- VII International Conference "Architecture of Finance: Crisis Financial Strategies at the time of Global Changes" (Saint Petersburg, Russia). Status: Participant. Report: "G.N.B.: Scientific Horizons of Professor Beloglazova"

2026:

• PEARSON  IT Specialist: Python Certification - Certiport, a Pearson VUE Business (Earned: April 2026). Credential ID/URL: CREDENTIAL_URL:

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• 120-Hour TESOL/TEFL Certificate (World TESOL Academy), 2021. Certificate number: WTA22219955; ACCREDITAT UKRLP: 10065351 

2018:

• Teaching Development Program: Teaching Principles and Practices – II (Centre for Economic Research & Graduate Education - Economics Institute (CERGE-EI);  HSE University St. Petersburg), 2018

2016:

• Teaching Development Program: Teaching Principles and Practices – I (Centre for Economic Research & Graduate Education - Economics Institute (CERGE-EI);  HSE University St. Petersburg), 2016

2006:

• The European Foundation Certificate in Banking (European Banking Training Network Absl), 2006

Programming & Query languages, Markups tools: Python, R, SQL, GraphQL, VBA, LaTeX, HTML, CSS, JavaScript

Integrated Development Environments (IDEs): VSCode, PyCharm, Spyder, Jupyter Notebook, Jupyter Hub, Jupyter Lab, Posit (RStudio), VBE, Google Colab

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