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Prospects and Limitations of the Use of Blockchain-Options for the Supply of Electricity

  • Andrew Varnavskiy
  • Ulia Gruzina
  • Artur RotEmail author
  • Anastasia Buryakova
  • Ekaterina Sebechenko
  • Vladislav Trubnikov
Chapter
  • 35 Downloads
Part of the Studies in Computational Intelligence book series (SCI, volume 887)

Abstract

The article raises the problem of integrating derivative financial instruments and decentralized networks. Within the framework of the solution of the indicated problem, the authors analyzed blockchain-option schemes. The purpose of the study is also to develop recommendations on the formation of models of blockchain-options in the electricity market. The contribution of the chapter is a proposition of a methodology, which has been developed for assessing the risks of using a platform for holding blockchain-options and then identifying the most likely risk scenarios. It was found that the expediency of options in decentralized models is mainly determined by the possibility of coordinating the interaction of market participants, rather than purely financial provisions. Moreover, the authors proved the possibility of integration in the following models: call option model, where the underlying asset is the energy platform token and put option model, where the underlying asset is the energy platform token. The most promising model was put option, which consists of the following: when the option is sold by the consumer, the supplier gets the right to supply energy in the future at a price higher than the market price, the cost of paying the premium is compensated by the release of additional tokens. This model creates the most favorable conditions for suppliers. Thus, based on the results of the study, it was possible to identify the characteristics of the most promising model of blockchain-options for the electricity market.

Keywords

Blockchain Distributed ledger technology Tokenization Electricity trading Electricity market Derivatives Options A decentralized platform for energy trading 

Notes

Acknowledgements

The material was prepared based on the results of studies carried out at the expense of funds provided under the grant of the Bank Santander.

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Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  • Andrew Varnavskiy
    • 1
  • Ulia Gruzina
    • 1
  • Artur Rot
    • 2
    Email author
  • Anastasia Buryakova
    • 1
  • Ekaterina Sebechenko
    • 1
  • Vladislav Trubnikov
    • 1
  1. 1.Financial University Under the Government of the Russian FederationMoscowRussia
  2. 2.Wroclaw University of Economics and BusinessWroclawPoland

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