Formalizing Cost Fairness for Two-Party Exchange Protocols using Game\n Theory and Applications to Blockchain (Extended Version)

Abstract

Existing fair exchange protocols usually neglect consideration of cost when\nassessing their fairness. However, in an environment with non-negligible\ntransaction cost, e.g., public blockchains, high or unexpected transaction cost\nmight be an obstacle for wide-spread adoption of fair exchange protocols in\nbusiness applications. For example, as of 2021-12-17, the initialization of the\nFairSwap protocol on the Ethereum blockchain requires the selling party to pay\na fee of approx. 349.20 USD per exchange. We address this issue by defining\ncost fairness, which can be used to assess two-party exchange protocols\nincluding implied transaction cost. We show that in an environment with\nnon-negligible transaction cost where one party has to initialize the exchange\nprotocol and the other party can leave the exchange at any time cost fairness\ncannot be achieved.\n