Graphlet-based Decentralized Finance Transaction Method Classification

Illicit transaction detection is often driven by transaction level attributes however, fraudulent behavior may also manifest through network structure such as central hubs, high flow intermediaries, and coordinated neighborhoods. This paper presents a time respecting, leakage safe (causal) graph feature extraction protocol for temporal transaction networks and evaluates its utility for illicit entity classification. Using the Elliptic dataset, we construct directed transaction graphs and compute interpretable structural descriptors, including degree statistics, PageRank, HITS hub or authority scores, k-core indices, and neighborhood reachability measures. To prevent look ahead bias, we additionally compute causal variants of graph features using only edges observed up to each timestep. A Random Forest classifier trained with strict temporal splits achieves strong discrimination on a held out future test period (ROC-AUC about 0.85, Average Precision about 0.54). Although transaction attributes remain the dominant predictive signal, graph derived features provide complementary interpretability and enable risk context analysis for investigation workflows. We further assess operational utility using Precision at k and evaluate probability reliability via calibration curves and Brier scores, showing that calibrated models yield better aligned probabilities for triage. Overall, the results support causal graph feature extraction as a practical and interpretable augmentation for temporal fraud detection pipelines.

Existing governance approaches in decentralized financial networks rely on manual review processes conducted by human committees, which introduces subjective bias, creates a scalability bottleneck under high network volume, and fails to capture complex behavioural patterns and evolving network dynamics. To address these limitations, we propose \name, a federated learning-based pairwise ranking framework in which multiple institutions collaboratively train a ranking model without sharing their private transaction data. This collaborative learning enables the model to capture network-wide behavioural patterns that signify strong network participation and directly contribute to the network effect, including diversity of counterparties, usage of multiple applications, and frequency of transactions. The proposed system ranks providers based on the authenticity of their actions, promoting genuine contributors and demoting those exhibiting suspicious behaviour. We evaluate \name\ on a real-world blockchain transaction dataset. Results demonstrate that the federated approach achieves ranking performance modestly below the centralized baseline (NDCG@15: $\approx$0.87 vs.\ $\approx$0.92) while preserving data privacy and matching its ranking stability (Kendall $τ$: $\approx$0.70 for both regimes), producing reliable governance decisions, including provider promotion and demotion (648 and 39 unique providers, respectively), without requiring centralized access to sensitive transaction data.

Credit exposure in Decentralized Finance (DeFi) is often implicit and token-mediated, creating a dense web of inter-protocol dependencies. Thus, a shock to one token may result in significant and uncontrolled contagion effects. As the DeFi ecosystem becomes increasingly linked with traditional financial infrastructure through instruments, such as stablecoins, the risk posed by this dynamic demands more powerful quantification tools. We introduce DeXposure-FM, the first time-series, graph foundation model for measuring and forecasting inter-protocol credit exposure on DeFi networks, to the best of our knowledge. Employing a graph-tabular encoder, with pre-trained weight initialization, and multiple task-specific heads, DeXposure-FM is trained on the DeXposure dataset that has 43.7 million data entries, across 4,300+ protocols on 602 blockchains, covering 24,300+ unique tokens. The training is operationalized for credit-exposure forecasting, predicting the joint dynamics of (1) protocol-level flows, and (2) the topology and weights of credit-exposure links. The DeXposure-FM is empirically validated on two machine learning benchmarks; it consistently outperforms the state-of-the-art approaches, including a graph foundation model and temporal graph neural networks. DeXposure-FM further produces financial economics tools that support macroprudential monitoring and scenario-based DeFi stress testing, by enabling protocol-level systemic-importance scores, sector-level spillover and concentration measures via a forecast-then-measure pipeline. Empirical verification fully supports our financial economics tools. The model and code have been publicly available. Model: https://huggingface.co/EVIEHub/DeXposure-FM. Code: https://github.com/EVIEHub/DeXposure-FM.