Analysis of Systemic Risk due to Transaction Cost for a Smart contract for P2P Electricity Trading

Abstract

Smart contracts running on blockchain enable the decentralization of electricity markets by peer-to-peer electricity trading without the involvement of an intermediary. Unlike other technologies, blockchain transactions are associated with costs for their deployment and execution. In this context, consumers and prosumers face new types of risks emerging from blockchain transaction costs leading to a denial of service or unfulfillment of functionalities. Risk analysis and management are essential for the sustainable adaption of the technology in the domain of P2P electricity markets. In this article, risk analysis due to blockchain transaction costs for a smart contract for P2P trading is presented with future directions of research for risk mitigation. Smart contract written in Solidity language running on Sepolia test net of Ethereum public blockchain is used for demonstration.