A research on Crypto Safety: Preventing Bank Runs and Liquidity Crises in CEX, withdraw or not for users when possible FTX rugs
Question: Recently, Binance froze Hamas-link accounts after Israeli request to prevent them from fundraising through cryptocurrency. With the assistance of Binance exchange, Israel did not only enforce the account freezing, but also diverted the funds to the Israeli state treasury. Considering possible future wars and regional conflicts, there are many users of centralised exchanges are worried that their accounts are also blocked or frozen.
Solution: First, through the context theory of asset pricing, collect relevant information, such as the current macro-market situation, investor sentiment, politics and geopolitics, crypto industry characteristics, etc., and make a context builder to incentivise the users to answer honestly; a quantitative We can get a quantitative user honesty, so we can get a final oracle output from the user evaluation. Second: Combine "context builder" and "market data" to build the whole database. The "market data" mentioned here mainly takes Binance exchange as the main object of observation, and integrates the direction of inflow and outflow of USDT and USDC in the hot wallets on the ethereum chain controlled by Binance, and observes the time period of nearly 500 blocks and about 100 minutes. It can reflect the current flow of funds, and market sentiment. Finally users get very clear conclusion, if once the same news event happens, such as binance or other superpower blocked some big shot's account again, whether ordinary crypto users need to transfer their funds away immediately to avoid potential risks.