Blockchain Papers

Hang-Yu Zhou

No abstract is available for this record.

Steven Paul Nohr

<b>Proof-of-Stake (PoS) security models</b> assume validator independence, decentralized decision-making, and economically rational but non-coordinated behavior. This paper introduces <b><i>Shadow Validator Cartels</i></b>, a class of covert consensus capture attacks in which validators coordinate off-chain to influence block production, transaction ordering, and governance outcomes while remaining individually protocol-compliant. Unlike explicit majority or 51% attacks, shadow cartels do not require dominant stake ownership or on-chain collusion. Instead, they leverage shared infrastructure, aligned economic incentives, and soft coordination mechanisms that render their behavior statistically indistinguishable from organic validator activity. We analyze the structural enablers, formation mechanics, and systemic impacts of shadow validator cartels, demonstrate why existing decentralization metrics fail to detect them, and outline system-level mitigation requirements necessary to preserve credible neutrality in PoS networks.

Peiding Pi, Xiaolong Liang, Sangtian Guan, Fei–Yue Wang

No abstract is available for this record.

Shrey Jain

No abstract is available for this record.

Yotam Gafni

Consider a social-choice function (SCF) is chosen to decide votes in a formal system, including votes to replace the voting method itself. Agents vote according to their ex-ante belief over what decisions are considered, and whether they prefer them to be decided by the incumbent SCF or the suggested replacement. The existing SCF then aggregates the agents' votes and arrives at a decision of whether it should itself be replaced. An SCF is self-maintaining if it can not be replaced in such fashion by any other SCF. Our focus is on the implications of self-maintenance for centralization. For this purpose, unlike [Barbera and Jackson, 2004], we do not generally restrict attention to anonymous SCFs. We also do not restrict attention to neutral SCFs, unlike [Koray, 2000]. We present results considering optimistic, pessimistic and i.i.d. approaches with respect to agent beliefs, different tie-breaking rules, and different SCF domains. To highlight two of the results, (i) for the i.i.d. unbiased case with arbitrary tie-breaking and general Boolean functions, we prove an Arrow-Style Theorem for Dynamics: We show that only a dictatorship is self-maintaining, and any other SCF has a path of changes that arrives at a dictatorship. (ii) With a pessimistic approach, tie-breaking that prefers the status quo, and WMGs, we provide a tight characterization of the self-maintaining rules, which are exactly all games with minimal winning coalitions of size at most 2. We then consider two extensions, (i) forward-looking voters, (ii) Where the voter utility depends on wisdom of the crowd effects. In both cases, less centralized SCFs become self-maintaining. All in all we provide a basic framework and body of results for centralization dynamics and stability, applicable for institution design, especially in formal De-Jure systems, such as Blockchain Decentralized Autonomous Organizations (DAOs).

Sascha Hägele

This paper examines the strategic behavior of rational actors in the TON blockchain, focusing on their responses to slashing mechanisms in a proof-of-stake (PoS) environment. Slashing introduces financial penalties for behavior that threatens network integrity, addressing the nothing-at-stake problem, where validators in PoS systems can support multiple chains at no cost. Although slashing is intended to deter malicious behavior by Byzantine actors, it also affects rational validators by altering their expected returns. Using a game-theoretic model inspired by the BAR framework, this study examines how rational, utility-maximizing validators weigh the risks and rewards of violating or enforcing slashing mechanisms in the presence of potentially Byzantine actors when penalty enforcement is uncertain. Located at the intersection of game theory and distributed systems, this research sheds light on compliance and deviation dynamics in PoS networks, contributing to a deeper understanding of incentive alignment in blockchain governance.

Amit Levy, S. Matthew Weinberg, Chenghan Zhou

We model the ultimate price paid by users of a decentralized ledger as resulting from a two-stage game where Miners (/Proposers/etc.) first purchase blockspace via a Tullock contest, and then price that space to users. When analyzing our distributed ledger model, we find: - A characterization of all possible pure equilibria (although pure equilibria are not guaranteed to exist). - A natural sufficient condition, implied by Regularity (a la [Mye81]), for existence of a ''market-clearing'' pure equilibrium where Miners choose to sell all space allocated by the Distributed Ledger Protocol, and that this equilibrium is unique. - The market share of the largest miner is the relevant ''measure of decentralization'' to determine whether a market-clearing pure equilibrium exists. - Block rewards do not impact users' prices at equilibrium, when pure equilibria exist. But, higher block rewards can cause pure equilibria to exist. We also discuss aspects of our model and how they relate to blockchains deployed in practice. For example, only ''patient'' users (who are happy for their transactions to enter the blockchain under any miner) would enjoy the conclusions highlighted by our model, whereas ''impatient'' users (who are interested only for their transaction to be included in the very next block) still face monopoly pricing.

Tranquilli, Julius, Gupta, Naman

Concentrated-liquidity automated market makers (CLAMMs), as exemplified by Uniswap v3, are now a common primitive in decentralized finance frameworks. Their design combines continuous trading on constant-function curves with discrete tick boundaries at which liquidity positions change and rounding effects accumulate. While there is a body of economic and game-theoretic analysis of CLAMMs, there is negligible work that treats Uniswap v3 at the level of formal state machines amenable to model checking or theorem proving. In this paper we propose a formal modeling approach for Uniswap v3-style CLAMMs using (i) networks of priced timed automata (PTA), and (ii) finite-state transducers (FST) over discrete ticks. Positions are treated as stateful objects that transition only when the pool price crosses the ticks that bound their active range. We show how to encode the piecewise constant-product invariant, fee-growth variables, and tick-crossing rules in a PTA suitable for tools such as UPPAAL, and how to derive a tick-level FST abstraction for specification in TLA+. We define an explicit tick-wise invariant for a discretized, single-tick CLAMM model and prove that it is preserved up to a tight additive rounding bound under fee-free swaps. This provides a formal justification for the "$ε$-slack" used in invariance properties and shows how rounding enters as a controlled perturbation. We then instantiate these models in TLA+ and use TLC to exhaustively check the resulting invariants on structurally faithful instances, including a three-tick concentrated-liquidity configuration and a bounded no-rounding-only-arbitrage property in a bidirectional single-tick model. We discuss how these constructions lift to the tick-wise structure of Uniswap v3 via virtual reserves, and how the resulting properties can be phrased as PTA/TLA+ invariants about cross-tick behaviour and rounding safety.

András Nagy, János Tapolcai, István András Seres, Bence Ladóczki

Proof-of-stake consensus protocols often rely on distributed randomness beacons (DRBs) to generate randomness for leader selection. This work analyses the manipulability of Ethereum's DRB implementation, RANDAO, in its current consensus mechanism. Even with its efficiency, RANDAO remains vulnerable to manipulation through the deliberate omission of blocks from the canonical chain. Previous research has shown that economically rational players can withhold blocks known as a block withholding attack or selfish mixing when the manipulated RANDAO outcome yields greater financial rewards.

Bruna Bruno, Angelo Murano, Vincenzo Vesprı

This study analyzes how blockchain technology can be interpreted through an economic perspective, viewing network nodes as rational agents whose strategic behavior affects the efficiency and sustainability of decentralized systems. Using a multi-player non-cooperative game with complete but imperfect information, we model validators’ decisions in voting-based consensus mechanisms and compare alternative incentive configurations through simulation results. The analysis shows how variations in reward schemes influence validators’ behavior and consensus reliability. Extending the framework to Decentralized Autonomous Organizations (DAOs), the study explores how blockchain-based incentives can enhance participation, accountability, and decentralized governance. The findings highlight that incentive design plays a decisive role in aligning individual motivations with collective goals, ensuring both network integrity and long-term sustainability. Overall, this study connects economic theory with blockchain governance, extending its relevance to business and organizational contexts beyond cryptocurrencies.

Jinho Cha, Jin-Ho Yoo, Eunchan Daniel Cha, Emily Yoo · 6 authors

Decentralized coordination and digital contracting are becoming critical in complex industrial ecosystems, yet existing approaches often rely on ad hoc heuristics or purely technical blockchain implementations without a rigorous economic foundation. This study develops a mechanism design framework for smart contract-based resource allocation that explicitly embeds efficiency and fairness in decentralized coordination. We establish the existence and uniqueness of contract equilibria, extending classical results in mechanism design, and introduce a decentralized price adjustment algorithm with provable convergence guarantees that can be implemented in real time. To evaluate performance, we combine extensive synthetic benchmarks with a proof-of-concept real-world dataset (MovieLens). The synthetic tests probe robustness under fee volatility, participation shocks, and dynamic demand, while the MovieLens case study illustrates how the mechanism can balance efficiency and fairness in realistic allocation environments. Results demonstrate that the proposed mechanism achieves substantial improvements in both efficiency and equity while remaining resilient to abrupt perturbations, confirming its stability beyond steady state analysis. The findings highlight broad managerial and policy relevance for supply chains, logistics, energy markets, healthcare resource allocation, and public infrastructure, where transparent and auditable coordination is increasingly critical. By combining theoretical rigor with empirical validation, the study shows how digital contracts can serve not only as technical artifacts but also as institutional instruments for transparency, accountability, and resilience in high-stakes resource allocation.

Mar Grande, J. Borondo

Ethereum’s introduction of smart contracts has significantly expanded blockchain use cases, enabling decentralized applications. Since all transactions are publicly available, the system can be modeled as a complex network, allowing us to uncover emergent user behavior and explore the underlying dynamics of the ecosystem. In this study, we focus on analyzing the structural differences within the Ethereum system across three distinct market regimes: bull, bear, and sideways. To achieve this, we apply a Hidden Markov Model to the log-return time series to uncover the underlying states, revealing three differentiated states, each corresponding to a specific market regime. Next, we investigate the network structural differences across these regimes, finding meaningful variations. During the bear regime, the out-degree distribution is more heterogeneous, with the largest hub exhibiting more extreme out-degree values. Additionally, during the bull and sideways regimes, we observe higher levels of reciprocity, clustering, and modularity compared to the bear regime. These findings suggest that during bull and sideways markets, the interaction patterns are more complex, and the community structure is more cohesive. Overall, our work underscores how market conditions shape trading patterns and the structural properties of the Ethereum transaction network, providing new insights into the interplay between market regimes, network topology, and user behavior in decentralized ecosystems.

Kohei Iwasaki

ABSTRACT This paper develops a model of a cryptocurrency by incorporating mining into the otherwise standard search‐theoretic monetary framework. As usual, multiple equilibria exist. To obtain a sharp prediction on whether a cryptocurrency' s value will last in the future, I propose a notion of equilibrium refinement based on the feature that mining uses real resources. This refinement eliminates all equilibria where the value of the cryptocurrency is zero at some point in time or converges to zero over time. This result suggests that agents can collectively sustain the value of the cryptocurrency using costly mining as a coordinating device.

S M Mostaq Hossain, Amani Altarawneh

Ethereum’s transaction pool (mempool) dynamics and fee market efficiency critically affect transaction inclusion, validator workload, and overall network performance. This research empirically analyzes gas price variations, mempool clearance rates, and block finalization times in Ethereum’s proof-of-stake ecosystem using real-time data from Geth and Prysm nodes. We observe that high-fee transactions are consistently prioritized, while low-fee transactions face delays or exclusion—despite EIP-1559’s intended improvements. Mempool congestion remains a key factor in validator efficiency and proposal latency. We provide empirical evidence of persistent fee-based disparities and show that extremely high fees do not always guarantee faster confirmation, revealing inefficiencies in the current fee market. To address these issues, we propose congestion-aware fee adjustments, reserved block slots for low-fee transactions, and improved handling of out-of-gas vulnerabilities. By mitigating prioritization bias and execution inefficiencies, our findings support more equitable transaction inclusion, enhance validator performance, and promote scalability. This work contributes to Ethereum’s long-term decentralization by reducing dependence on high transaction fees for network participation.

Harang Ju, Meera Kumar, Ehsan Valavi, Sinan Aral

Blockchains support a rapidly growing digital economy. Through decentralization, they enable the ownership and transfer of digital assets without centralized intermediaries while resisting attacks, faults, and collusion. Yet decentralization is not guaranteed and must be sustained against external shocks. What design choices help blockchains maintain decentralization when disrupted? We find that resource flexibility, how easily consensus resources can be moved and redeployed, is key to sustained decentralization. Using three real-world shocks—China’s 2021 crypto mining ban, Hetzner’s 2022 shutdown of Solana validators, and Ethereum’s transition from proof-of-work to proof-of-stake—we show that blockchains whose consensus resources are more flexible recover decentralization faster. These findings offer actionable guidance. Blockchain designers should consider resource flexibility as a first-order design parameter. Operators should diversify infrastructure across jurisdictions to reduce vulnerability to localized shocks. Policymakers should be aware that regulations targeting blockchains can have unintended effects on decentralization.

Julia Butte, André Platzer

Abstract This paper introduces semi-competitive differential game logic $$\textsf {dG}\mathcal {L}_{sc}$$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>dG</mml:mi> <mml:msub> <mml:mi>L</mml:mi> <mml:mrow> <mml:mi>sc</mml:mi> </mml:mrow> </mml:msub> </mml:mrow> </mml:math> , which enables verification of safety-critical applications that involve interactions between two agents. In $$\textsf {dG}\mathcal {L}_{sc}$$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>dG</mml:mi> <mml:msub> <mml:mi>L</mml:mi> <mml:mrow> <mml:mi>sc</mml:mi> </mml:mrow> </mml:msub> </mml:mrow> </mml:math> , these interactions are specified as games on hybrid systems with two players that may collaborate with each other when helpful and may compete when necessary. The players in the hybrid games of $$\textsf {dG}\mathcal {L}_{sc}$$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>dG</mml:mi> <mml:msub> <mml:mi>L</mml:mi> <mml:mrow> <mml:mi>sc</mml:mi> </mml:mrow> </mml:msub> </mml:mrow> </mml:math> have individual goals that may overlap, leading to nonzero-sum games. This makes $$\textsf {dG}\mathcal {L}_{sc}$$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>dG</mml:mi> <mml:msub> <mml:mi>L</mml:mi> <mml:mrow> <mml:mi>sc</mml:mi> </mml:mrow> </mml:msub> </mml:mrow> </mml:math> especially well-suited for verifying situations where players, e.g., share safety objectives but otherwise pursue different goals, so that zero-sum assumptions lead to overly conservative results. Additionally, $$\textsf {dG}\mathcal {L}_{sc}$$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>dG</mml:mi> <mml:msub> <mml:mi>L</mml:mi> <mml:mrow> <mml:mi>sc</mml:mi> </mml:mrow> </mml:msub> </mml:mrow> </mml:math> solves the subtlety that even though each player may benefit from knowledge of the other player’s goals, e.g., concerning shared safety objectives, unsafe situations might still occur if every player were to mutually assume the other player would act to avoid unsafety. The syntax and semantics, as well as a sound and relatively complete proof calculus are presented for $$\textsf {dG}\mathcal {L}_{sc}$$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>dG</mml:mi> <mml:msub> <mml:mi>L</mml:mi> <mml:mrow> <mml:mi>sc</mml:mi> </mml:mrow> </mml:msub> </mml:mrow> </mml:math> . The relationship between $$\textsf {dG}\mathcal {L}_{sc}$$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>dG</mml:mi> <mml:msub> <mml:mi>L</mml:mi> <mml:mrow> <mml:mi>sc</mml:mi> </mml:mrow> </mml:msub> </mml:mrow> </mml:math> and zero-sum differential game logic $$\textsf {dG}\mathcal {L}$$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>dG</mml:mi> <mml:mi>L</mml:mi> </mml:mrow> </mml:math> is discussed and the purpose of $$\textsf {dG}\mathcal {L}_{sc}$$ <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>dG</mml:mi> <mml:msub> <mml:mi>L</mml:mi> <mml:mrow> <mml:mi>sc</mml:mi> </mml:mrow> </mml:msub> </mml:mrow> </mml:math> illustrated in a canonical example.

Aniruddha Biswas, Shah Zaman

The field of quantitative finance is constantly seeking new tools to exploit the complexities of the financial markets. With classical computers having limitations, the burgeoning field of quantum computing offers immense computational capabilities. Though Belief Networks have been useful in quantitative finance, their towering computational demands on classical systems limit their efficacy. On the other hand, Bitcoin’s popularity has increased in the last few years due to its unique features, such as decentralization and blockchain. Being relatively new Bitcoin’s market possesses huge potential. Price of the Bitcoin depends upon various economic and market factors, also possesses quite high volatility making traders worried while dealing with it. This project tries explore the potential of quantum computing technologies and Belief networks for developing new long-short Bitcoin trading strategy by leveraging the strengths of both paradigms.

Sveinn Ólafsson

No abstract is available for this record.

James Darrell Duffie, Chaojun Wang

No abstract is available for this record.

Oliver Hirst

The consensus problem in distributed ledger systems has two distinct dimensions that existing protocols systematically conflate. The first is the Byzantine fault-tolerance question: can a network reach agreement in the presence of arbitrary failures? The second — less formalised but no less fundamental — is the anti-cartel question: can the incentive structure of the consensus mechanism structurally resist the formation of cartels that reconstitute centralised authority under a nominally decentralised banner? Bitcoin's proof-of-work has produced a system where a small number of industrial mining pools control the majority of hash power. BitCell is a proposal that takes the anti-cartel question seriously as an engineering problem rather than an economic folk theorem. BitCell replaces hash-grinding and stake-weighting with cellular automaton tournaments as the computational substrate for block proposal rights. In each round, miners commit to a pattern in a bounded Conway's Game of Life grid, are verifiably randomly paired via a VRF-based pairing mechanism, and compete in a deterministic single-elimination tournament whose outcome depends on strategic pattern design rather than raw computational expenditure or capital size. Victory rights are not transferable and are not enhanced by pooling strategies: a cartel of sub-majority miners cannot coordinate to construct a jointly optimal pattern that dominates unilateral honest play, because the tournament's pairwise structure, hidden identities (via ring signatures), non-shareable rewards, and reputation-gated eligibility remove each of the primary economic motivations that make mining pools attractive. Under a simple Bayesian model of miner incentives, collusive strategies for sub-majority cartels yield strictly lower expected payoffs than unilateral honest participation. Tournament eligibility and reward weighting are governed by an Evidence-Based Subjective Logic (EBSL) reputation layer. All state transitions are proven using succinct zero-knowledge proofs, enabling a ZKVM-backed smart contract layer with native privacy. BitCell makes three primary contributions: (i) a proof-of-computation consensus mechanism whose computational task is verifiable, bounded, non-parallelisable by pooling, and intellectually non-trivial; (ii) a game-theoretic proof that the combination of pairwise tournaments, anonymised pairing, non-transferable victory rights, and reputation gating renders cartel coordination strictly dominated in a Bayesian Nash equilibrium; and (iii) a native ZKVM execution environment for privacy-preserving smart contracts.

Aggelos Kiayias, Ηλίας Κουτσουπιάς, Evangelos Markakis, Panagiotis Tsamopoulos

We study a game-theoretic model for pool formation in Proof of Stake blockchain protocols. In such systems, stakeholders can form pools as a means of obtaining regular rewards from participation in ledger maintenance, with the power of each pool being dependent on its collective stake. The question we are interested in is the design of mechanisms, i.e., "reward sharing schemes," that suitably split rewards among pool members and achieve favorable properties in the resulting pool configuration. With this in mind, we initiate a non-cooperative game-theoretic analysis of the well known Shapley value scheme from cooperative game theory into the context of blockchains. In particular, we focus on the oceanic model of games, proposed by Milnor and Shapley (1978), which is suitable for populations where a small set of large players coexists with a big mass of rather small, negligible players. This provides an appropriate level of abstraction for pool formation processes that occur among the stakeholders of a blockchain. We provide comparisons between the Shapley mechanism and the more standard proportional scheme, in terms of attained decentralization, via a Price of Stability analysis and in terms of susceptibility to Sybil attacks, i.e., the strategic splitting of a players' stake with the intention of participating in multiple pools for increased profit. Interestingly, while the widely deployed proportional scheme appears to have certain advantages, the Shapley value scheme, which rewards higher the most pivotal players, emerges as a competitive alternative, by being able to bypass some of the downsides of proportional sharing in terms of Sybil attack susceptibility, while also not being far from optimal guarantees w.r.t. decentralization. Finally, we also complement our study with some variations of proportional sharing, where the profit is split in proportion to a superadditive or a subadditive function of the stake, showing that our results for the Shapley value scheme are maintained in comparison to these functions as well.

Daniil Krizhanovskyi

No abstract is available for this record.

Dimitris Karakostas, Aggelos Kiayias, Thomas Zacharias

We analyze bribing attacks in Proof-of-Stake distributed ledgers from a game theoretic perspective. In bribing attacks, an adversary offers participants a reward in exchange for instructing them how to behave, with the goal of attacking the protocol's properties. Specifically, our work focuses on adversaries that target blockchain safety. We consider two types of bribing, depending on how the bribes are awarded: i) guided bribing, where the bribe is given as long as the bribed party behaves as instructed; ii) effective bribing, where bribes are conditional on the attack's success, w.r.t. well-defined metrics. We analyze each type of attack in a game theoretic setting and identify relevant equilibria. In guided bribing, we show that the protocol is not an equilibrium and then describe good equilibria, where the attack is unsuccessful, and a negative one, where all parties are bribed such that the attack succeeds. In effective bribing, we show that both the protocol and the "all bribed" setting are equilibria. Using the identified equilibria, we then compute bounds on the Prices of Stability and Anarchy. Our results indicate that additional mitigations are needed for guided bribing, so our analysis concludes with incentive-based mitigation techniques, namely slashing and dilution. Here, we present two positive results, that both render the protocol an equilibrium and achieve maximal welfare for all parties, and a negative result, wherein an attack becomes more plausible if it severely affects the ledger's token's market price.

Sabrina Aufiero, Giacomo Ibba, Silvia Bartolucci, Giuseppe Destefanis · 6 authors

Abstract Decentralized applications (DApps) built on blockchain platforms such as Ethereum and coded in languages such as Solidity, have recently gained attention for their potential to disrupt traditional centralized systems. Despite their rapid adoption, limited research has been conducted to understand the underlying code structure of these applications. In particular, each DApp is composed of multiple smart contracts, each containing a number of functions that can be called to trigger a specific event, e.g., a token transfer. In this paper, we reconstruct and analyse the network of contracts and functions calls within the DApp, which is helpful to unveil vulnerabilities that can be exploited by malicious attackers. We show how decentralization is architecturally implemented, identifying common development patterns and anomalies that could influence the system’s robustness and efficiency. We find a consistent network structure characterized by modular, self-sufficient contracts and a complex web of function interactions, indicating common coding practices across the blockchain community. Critically, a small number of key functions within each DApp play a central role in maintaining network connectivity, making them potential targets for cyber attacks and highlighting the need for robust security measures.