Scientists from Imperial College London are trying to predict the crypto market’s movements using AI technologies, while specialists from King’s College London are applying particle physics methods to explain why major crypto projects collapse.
Scientists from King’s College London applied statistical mechanics used in particle physics to analyze why the cryptocurrency LUNA plummeted. The researchers believe their work will allow them to study the microstructures of the crypto market.
The study’s authors focused on analyzing transactions during the crisis, treating them as physical particles with motion on a 1-dimensional axis. The transaction size corresponded to the particle mass, and the distance the transaction moved corresponded to the particle movement. The same techniques are used to study thermodynamic interactions and atomic processes. By applying them to events in a specific time period in the market, the researchers were able to delve into LUNA’s microstructure and identify the underlying causes of the crypto project’s collapse. They also discovered many cases of market manipulation that contributed significantly to the crisis.
The team developed a special algorithm to identify the manipulations. However, the researchers claim that the model requires refinements as they used synthetic data due to the lack of reliable information about the Terra crash.
A team of researchers from Imperial College London established a collaboration with FluidAI, an innovative AI startup. Joint efforts will be aimed at studying the problems of liquidity aggregation in the crypto market and the possibility of using AI to predict supply and demand for various cryptocurrencies.
Last year, the U.K. government announced plans to make the country a global hub for the crypto tech industry and strengthen regulation of the crypto market.
