Hayek's theory of private money as a conceptual framework for Sustainable DeFi

Alexey Mikhaylov; Alexey Mikhaylov

doi:10.3934/GF.2026026

Green Finance

2026, Volume 8, Issue 4: 725-749. doi: 10.3934/GF.2026026

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Research article

Hayek's theory of private money as a conceptual framework for Sustainable DeFi

Alexey Mikhaylov ^{1,2
,
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1.
Financial Faculty, Financial University under the Government of the Russian Federation, Moscow, 125167, Russia
2.
Department of Informatics, Plekhanov Russian University of Economics, Moscow, 117997, Russia

Received: 23 January 2026 Revised: 25 August 2026 Accepted: 15 October 2026 Published: 22 October 2026
JEL Codes: B24, B25, G01, G28, E44

In this article, we explored the continuity between Friedrich August von Hayek's theory of private money (1976) and the modern phenomenon of Sustainable DeFi while critically examining the gaps between Hayek's ideal and current reality. We demonstrated that Sustainable DeFi implements key Hayekian mechanisms, competition among issuers, voluntary currency choice, market-based selection, and decentralized governance, through technologies Hayek could not have anticipated, such as smart contracts, algorithmic stabilization, and permissionless protocols. However, we also identified significant limitations: Ownership concentration among "whales" undermines genuine competition; the pseudonymous nature of crypto creates tension with Hayek's emphasis on rule of law and transparency; and stablecoins, as mirrors of state currencies, serve transactional functions but do not represent true alternatives to state money. We developed a multi-dimensional scoring framework to evaluate crypto assets against Hayekian criteria and examined empirical evidence of failures (as market discovery procedures) and resilience (as proof of market-based coordination). We concluded that Sustainable DeFi is best understood not as a completed realization of Hayek's vision but as an ongoing, large-scale experiment in monetary competition that has validated some of Hayek's insights while revealing new challenges unknown to him, including technological risks, regulatory fragmentation, and the need for institutional maturity. The future of this experiment will depend on whether the ecosystem can address these challenges while preserving the competitive discovery process that Hayek championed.
- Hayek,
- private money,
- Sustainable DeFi,
- blockchain,
- currency competition,
- monetary theory,
- smart contracts
Citation: Alexey Mikhaylov. Hayek's theory of private money as a conceptual framework for Sustainable DeFi[J]. Green Finance, 2026, 8(4): 725-749. doi: 10.3934/GF.2026026

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Abstract

In this article, we explored the continuity between Friedrich August von Hayek's theory of private money (1976) and the modern phenomenon of Sustainable DeFi while critically examining the gaps between Hayek's ideal and current reality. We demonstrated that Sustainable DeFi implements key Hayekian mechanisms, competition among issuers, voluntary currency choice, market-based selection, and decentralized governance, through technologies Hayek could not have anticipated, such as smart contracts, algorithmic stabilization, and permissionless protocols. However, we also identified significant limitations: Ownership concentration among "whales" undermines genuine competition; the pseudonymous nature of crypto creates tension with Hayek's emphasis on rule of law and transparency; and stablecoins, as mirrors of state currencies, serve transactional functions but do not represent true alternatives to state money. We developed a multi-dimensional scoring framework to evaluate crypto assets against Hayekian criteria and examined empirical evidence of failures (as market discovery procedures) and resilience (as proof of market-based coordination). We concluded that Sustainable DeFi is best understood not as a completed realization of Hayek's vision but as an ongoing, large-scale experiment in monetary competition that has validated some of Hayek's insights while revealing new challenges unknown to him, including technological risks, regulatory fragmentation, and the need for institutional maturity. The future of this experiment will depend on whether the ecosystem can address these challenges while preserving the competitive discovery process that Hayek championed.

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