Book

Description

Decentralized finance (DeFi) has evolved into a high-speed, multi-layered ecosystem powered by autonomous smart contracts and programmatic liquidity. While these innovations eliminate traditional financial intermediaries, they simultaneously create structural vulnerabilities that enable machine-speed market abuse—including maximal extractable value (MEV) exploitation, oracle manipulation, and engineered liquidation cascades. AURORA: Institutional DeFi Market Abuse Surveillance and Systemic Risk Intelligence Framework introduces a novel computational architecture designed to bridge the gap between decentralized market microstructure and regulatory enforcement. At the core of AURORA lies the PULSE-MEV algorithm, an analytical engine combining multi-layer causal inference, counterfactual protocol state simulation, and behavioral graph analytics to distinguish deliberate market distortion from organic volatility. Moving beyond reactive forensic tracing, AURORA evaluates cross-protocol contagion pathways and generates real-time, audit-ready risk indicators—such as manipulation probability scores, liquidity stress tensors, and market fragility indices. Crucially, the framework maps technical on-chain signals directly into structured legal classifications aligned with emerging global regulatory regimes, including the EU Markets in Crypto-Assets Regulation (MiCA) and the UK Market Abuse Regime for Cryptoassets (MARC). This work provides regulators, financial institutions, and protocol governance bodies with a scalable blueprint for ensuring market integrity and systemic stability in digital asset markets.