CEV Framework: A Central Bank Digital Currency Evaluation and Verification Framework With a Focus on Consensus Algorithms and Operating Architectures

TL;DR

The paper introduces the CEV Framework, a comprehensive method for evaluating and verifying technical solutions for CBDC systems, focusing on consensus algorithms and operating architectures to balance system features.

Contribution

It is the first framework to recommend and verify CBDC technical solutions, enabling iterative tuning of system feature trade-offs.

Findings

Customized solutions generated by analyzing consensus components

Improved operating architectures compensate for feature trade-offs

Empirical experiments and formal proofs validate the framework

Abstract

We propose a Central Bank Digital Currency Evaluation and Verification (CEV) Framework for recommending and verifying technical solutions in the central bank digital currency (CBDC) system. We demonstrate two sub-frameworks: an evaluation sub-framework that provides consensus algorithm and operating architecture solutions and a verification sub-framework that validates the proposed solutions. Our framework offers a universal CBDC solution that is compatible with different national economic and regulatory regimes. The evaluation sub-framework generates customized solutions by splitting the consensus algorithms into several components and analyzing their impacts on CBDC systems. CBDC design involves a trade-off between system features - the consensus algorithm cannot achieve all system features simultaneously. However, we also improve the operating architectures to compensate for the weak system features. The verification sub-framework helps verify our proposed solution through empirical experiments and formal proof. Our framework offers CBDC designers the flexibility to iteratively tune the trade-off between CBDC system features for the desired solution. To the best of our knowledge, we are the first to propose a framework to recommend and verify CBDC technical solutions.