Formal Analysis of Lending Pools in Decentralized Finance

Kavli Affiliate: James Chiang

| First 5 Authors: Massimo Bartoletti, James Chiang, Tommi Junttila, Alberto Lluch Lafuente, Massimiliano Mirelli

| Summary:

Decentralised Finance (DeFi) applications constitute an entire financial
ecosystem deployed on blockchains. Such applications are based on complex
protocols and incentive mechanisms whose financial safety is hard to determine.
Besides, their adoption is rapidly growing, hence imperilling an increasingly
higher amount of assets. Therefore, accurate formalisation and verification of
DeFi applications is essential to assess their safety. We present a tool for
the formal analysis of one of the most widespread DeFi applications: Lending
Pools (LP). This was achieved by leveraging an existing formal model for LPs,
the Maude verification environment and the MultiVeStA statistical analyser. The
tool supports several analyses including reachability analysis, LTL model
checking and statistical model checking. We show how the tool can be used to
statistically analyse several parameters of LPs that are fundamental to assess
and predict their behaviour.

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