Self-executing smart contract is believed to revolutionize global procurement by eliminating payment delay and enhancing transaction efficiency. This paper studies the value of smart contract in global procurement, and how the tariff regulations (specific tariff and ad valorem tariff) would affect the retailerâs preference of adopting smart contract.
Compared to traditional contract, the adoption of smart contract alleviates the supplierâs cost pressure while induces the retailerâs cash opportunity cost. Therefore, whether to adopt smart contract in global procurement becomes the retailerâs strategic and practice-relevant decision. The investigation of import tariffs also appears new in the literature.
We develop a game-theoretical model consisting of a retailer and an overseas supplier, where the retailer resells the supplierâs products and also sells self-brand products under the regulation of either a specific or an ad valorem tariff. Under both the tariffs, the retailer adopts either the traditional contract or smart contract to procure from the supplier.
We identify interesting interactions among tariff regulations, the supplierâs pricing decisions, and the value of cash opportunity cost (information update) under smart contract (traditional contract). We find that an increased specific tariff reduces the retailerâs incentives to adopt smart contract, while an increased ad valorem tariff could strengthen the retailerâs incentives to adopt smart contract. Interestingly, we find that, if the retailer faces high demand uncertainty, smart contract could be more profitable given the retailerâs low cash opportunity cost and a moderate ad valorem tariff rate.
Our results can be insightful for the retailers who plan to adopt smart contract but worry about the cash opportunity cost issues. We uncover the rationales of import tariffs promoting or hindering the FinTech (Financial Technology) adoption in global procurement.
Many empirical software engineering studies show that there is a need for repositories where source codes are acquired, filtered and classified. During the last few years, Ethereum block explorer services have emerged as a popular project to explore and search for Ethereum blockchain data such as transactions, addresses, tokens, smart contractsâ source codes, prices and other activities taking place on the Ethereum blockchain. Despite the availability of this kind of service, retrieving specific information useful to empirical software engineering studies, such as the study of smart contractsâ software metrics, might require many subtasks, such as searching for specific transactions in a block, parsing files in HTML format, and filtering the smart contracts to remove duplicated code or unused smart contracts. In this paper, we afford this problem by creating Smart Corpus, a corpus of smart contracts in an organized, reasoned and up-to-date repository where Solidity source code and other metadata about Ethereum smart contracts can easily and systematically be retrieved. We present Smart Corpusâs design and its initial implementation, and we show how the data set of smart contractsâ source codes in a variety of programming languages can be queried and processed to get useful information on smart contracts and their software metrics. Smart Corpus aims to create a smart-contract repository where smart-contract data (source code, application binary interface (ABI) and byte code) are freely and immediately available and are classified based on the main software metrics identified in the scientific literature. Smart contractsâ source codes have been validated by EtherScan, and each contract comes with its own associated software metrics as computed by the freely available software PASO. Moreover, Smart Corpus can be easily extended as the number of new smart contracts increases day by day.
João Paulo de Brito Gonçalves, Roberta Lima Gomes, Rodolfo da Silva Villaça, Esteban Municio · 5 authors
Service Level Agreements (SLAs) are used in contracts between two parts, which can be, as an example, between service providers or between customers and service providers. SLA clauses represent key aspects in the relationship between them. In order to enforce service reliability and SLA compliance, a continuous monitoring of Quality of Service metrics is required. Since policy breach is usually subject to expensive penalties, using external entities acting as trustful references is a common practice in order to avoid frequent legal disputes, external entities are usually required to verify it. However, coordination between different actors to agree in one transaction is difficult, because it can open up possibilities for multiple fraud attempts. We argue that this can be done more efficiently using Smart Contracts, programs that are executed in a blockchain. Such data is stored in a distributed structure without the need of an external entity to ensure data integrity and reliability. Smart contracts can also makes easy the charging or possibly compensating SLA violations. In this paper we propose a solution empowered by smart contracts in order to simplify, and to automate the process of SLA validation, i.e, verify if the contract is being respected. We perform some experiments and evaluate a proof of concept using data from a real network infrastructure in Brazil.
Permissionless blockchain systems, such as Bitcoin, rely on users using their computational power to solve a puzzle in order to achieve a consensus. To incentivise users in maintaining the system, newly minted coins are assigned to the user who solves this puzzle. A hardware race that has hence ensued among the users, has had a detrimental impact on the environment, with enormous energy consumption and increased global carbon footprint. On the other hand, proof of stake systems incentivise coin hoarding as players maximise their utility by holding their stakes. As a result, existing cryptocurrencies do not mimic the day-to-day usability of a fiat currency, but are rather regarded as crypto-assets or investment vectors. In this work we initiate the study of minting mechanisms in cryptocurrencies as a primitive on its own right, and as a solution to prevent coin hoarding we propose a novel minting mechanism based on waiting-time first-price auctions. Our main technical tool is a protocol to run an auction over any blockchain. Moreover, our protocol is the first to securely implement an auction without requiring a semi-trusted party, i.e., where every miner in the network is a potential bidder. Our approach is generically applicable and we show that it is incentive-compatible with the underlying blockchain, i.e., the best strategy for a player is to behave honestly. Our proof-of-concept implementation shows that our system is efficient and scales to tens of thousands of bidders.
Markus Nissl, Emanuel Sallinger, Stefan Schulte, Michael Borkowski
In recent years, manifold blockchain protocols have been proposed by researchers and industrial companies alike. This has led to a very heterogeneous blockchain landscape. Accordingly, it would be desirable if blockchains could interact with each other. However, current blockchain technologies offer only limited support for interoperability, thus preventing tokens or smart contracts from leaving the scope of a particular blockchain. As a first step towards a solution for cross-chain smart contract interactions, we introduce a framework which allows to invoke a smart contract from another blockchain. We offer support for continuing a smart contract after receiving a result from a different blockchain, and for calling smart contracts recursively across blockchains. We provide a reference implementation for Ethereum-based blockchains using Solidity and evaluate the performance regarding time and cost overheads.
It is an important decision-making problem for a miner in the blockchain networks if he/she participates in the mining so that he/she earns a reward by creating a new block earlier than other miners. We formulate this decision-making problem as a noncooperative game, because the probability of creating a block depends not only on one's own available computational resources, but also those of other miners. Through theoretical and numerical analyses, we show a hysteresis phenomenon of Nash equilibria depending on the reward and a jump phenomenon of miner decisions by a slight change in reward. We also show that the reward for which miners decide not to participate in the mining becomes smaller as the number of miners increases.
We suggest the re-introduction of bartering to create a cryptocurrencyless, currencyless, and moneyless economy segment. We contend that a barter economy would benefit enterprises, individuals, governments and societies. For instance, the availability of an online peer-to-peer barter marketplace would convert ordinary individuals into potential traders of both tangible and digital items and services. For example, they will be able to barter files and data that they collect. Equally motivating, they will be able to barter and re-introduce to the economy items that they no longer need such as, books, garden tools, and bikes which are normally kept and wasted in garages and sheds. We argue that most of the pieces of technology needed for building a barter system are now available, including blockchains, smart contracts, cryptography, secure multiparty computations and fair exchange protocols. However, additional research is needed to refine and integrate the pieces together. We discuss potential research directions.
We propose a secure and efficient implementation of fungible tokens on Bitcoin. Our technique is based on a small extension of the Bitcoin script language, which allows the spending conditions in a transaction to depend on the neighbour transactions. We show that our implementation is computationally sound: that is, adversaries can make tokens diverge from their ideal functionality only with negligible probability.
We develop a formal model of Algorand stateless smart contracts (stateless ASC1.) We exploit our model to prove fundamental properties of the Algorand blockchain, and to establish the security of some archetypal smart contracts. While doing this, we highlight various design patterns supported by Algorand. We perform experiments to validate the coherence of our formal model w.r.t. the actual implementation.
Tao Li, Yuling Chen, Yanli Wang, Yilei Wang · 9 authors
Blockchain has been an emerging technology, which comprises lots of fields such as distributed systems and Internet of Things (IoT). As is well known, blockchain is the underlying technology of bitcoin, whose initial motivation is derived from economic incentives. Therefore, lots of components of blockchain (e.g., consensus mechanism) can be constructed toward the view of game theory. In this paper, we highlight the combination of game theory and blockchain, including rational smart contracts, game theoretic attacks, and rational mining strategies. When put differently, the rational parties, who manage to maximize their utilities, involved in blockchain chose their strategies according to the economic incentives. Consequently, we focus on the influence of rational parties with respect to building blocks. More specifically, we investigate the research progress from the aspects of smart contract, rational attacks, and consensus mechanism, respectively. Finally, we present some future directions based on the brief survey with respect to game theory and blockchain.
This paper presents a novel emulation concept for the test of smartcontracts and Distributed Ledger Technologies (DLT) in distributecontrol or energy economy tasks and use cases. The concept usesstate of the art behavioral modeling tools such as Matlab Simulinkbut presents a possible way to solve the shortfall of Simulink incommunicating to DLT-Nodes directly. This is solved througha middleware solution. After this, an example used in verifyingthe test bed is presented and the target demonstration object is de-scribed. Finally, the possible expansion of the system is discussedand presented.
Michael Darlin, Nikolaos Papadis, Leandros Tassiulas
The Maker Protocol is a decentralized finance application that enables collateralized lending. The application uses open-bid, second-price auctions to complete its loan liquidation process. In this paper, we develop a bidding function for these auctions, focusing on the costs incurred to participate in the auctions. We then optimize these costs using parameters from historical auction data, and compare our optimal bidding prices to the historical auction prices. We find that the majority of auctions end at higher prices than our recommended optimal prices, and we propose several theories for these results.
Moritz Platt, Francesco Pierangeli, Giacomo Livan, Simone Righi
This article discusses a protocol to facilitate decentralised exchanges on an order-driven market through a consortium of market services operators. We discuss whether this hybrid protocol combining a centralised initiation phase with a decentralised execution phase outperforms fully centralised exchanges with regards to efficiency and security. Here, a fully efficient and fully secure protocol is defined as one where traders incur no trading costs or opportunity costs and counterparty risk is absent. We devise a protocol addressing the main downsides in the decentralised exchange process that uses a facilitating distributed ledger, maintains an order book and monitors the order status in real-time to provide accurate exchange rate information and performance scoring of participants. We show how performance ratings can lower opportunity costs and how a rolling benchmark rate of verifiable trades can be used to establish a trustworthy exchange rate between cryptocurrencies. The formal validation of the proposed technical mechanisms is the subject of future work.
We propose a smart contract that allows two mutually distrusting parties to transact any non-digital good or service by deploying a smart contract on a blockchain to act as escrow. The contract settles disputes by letting parties wager that they can convince an arbiter that they were the honest party. We analyse the contract as an extensive-form game and prove that the honest strategy is secure in a strong game-theoretic sense if and only if the arbiter is biased in favor of honest parties. By relaxing the security notion, we can replace the arbiter by a random coin toss. Finally, we show how to generalize the contract to multiparty transactions in a way that amortizes the transaction fees.
The traceable execution of business processes and choreographies using smart contracts is one prominent application of blockchain technology in Business Process Management (BPM). Existing approaches support a large set of patterns, modeling languages, and blockchain architectures, which cover a wide range of practical scenarios. However, they largely neglect the important aspect of time, a crucial part of process and choreography models manifested in deadlines, delays, and other temporal constraints. We argue that this deficit is due to inherent limitations of smart contracts---in particular the absence of a natural notion of measuring time---on popular blockchain platforms used in research and practice. We introduce a set of time measures available on blockchain platforms to alleviate these issues, and systematically compare their properties. We also give hints as to their suitability for facilitating various temporal constraints commonly found in process models.
Yeray Mezquita, Roberto CasadoâVara, Alfonso GonzĂĄlezâBriones, Javier Prieto · 5 authors
Abstract Logistics services involve a wide range of transport operations between distributors and clients. Currently, the large number of intermediaries are a challenge for this sector, as it makes all the processes more complicated. To face that problem, we propose a system that uses smart contracts to remove intermediaries and speed up logistics activities. Our new model combines smart contracts and a multi-agent system in a single platform to improve the current logistics system by increasing organization, security and getting rid of several human intermediaries to automate its processes, making distribution times significantly faster. Also, with this kind of approach, it is possible to apply penalties to parties that do not comply with the terms of using this platform.
A core challenge in studying the real return on artist' work is the extreme difficulty accessing private records from when an artwork was first sold and thus relying on public auction data. In addition, artists do not typically receive proceeds after the initial sale. This paper, for the first time, uses archivally sourced primary market records to model returns on art and introduces a novel fractional equity structure for artists. We first model what would happen if the American artists Jasper Johns and Robert Rauschenberg had retained 10% equity in their work when it was first sold. Second, we model a portfolio return using data from the Betty Parsons Gallery and the Green Gallery. To add a portfolio analysis to the performance of âstarâ artists, we model the galleries as a fund invested in all of artworks sold, using auction sales as the realization event. We find that the individual Johns and Rauschenberg works would have vastly outperformed equities markets. The gallery portfolio still substantially outperforms the S&P, even including 20% transaction costs. Beyond the art market, our larger conceptual framework for retained fractional equity has broad implications for compensation of early-stage creative work in any field and for potential applications of blockchain technology. This paper was accepted by Karl Diether, finance.
Tiantian Gong, Mohsen Minaei, Wenhai Sun, Aniket Kate
A fixed block reward and voluntary transaction fees are two sources of economic incentives for mining in Bitcoin and other cryptocurrencies. For Bitcoin, the block reward halves every 210,000 blocks and it is supposed to vanish gradually. The remaining incentive of transaction fees is optional and arbitrary, and an undercutting attack becomes a potential threat, where the attacker deliberately forks an existing chain by leaving wealthy transactions unclaimed to attract other miners. We look into the profitability of the undercutting attack in this work.
Our numerical simulations and experiments demonstrate that (i) only miners with mining power > 40% have a reasonable probability of successfully undercutting. (ii) As honest miners do not shift to the fork immediately in the first round, an undercutter's profit drops with the number of honest miners. Given the current transaction fee rate distribution in Bitcoin, with half of the miners being honest, undercutting cannot be profitable at all; With 25% honest mining power, an undercutter with > 45% mining power can expect income more than its fair share; With no honest miners present, the threshold mining power for a profitable undercutting is 42%. (iii) For the current largest Bitcoin mining pool with 17.2% mining power, the probability of successfully launching an undercutting attack is tiny and the expected returns are far below honest mining gains. (iv) While the larger the prize the undercutter left unclaimed, the higher is the probability of the attack succeeding but the attack's profits also go down. Finally, we analyze the best responses to undercutting for other rational miners. (v) For two rational miners and one of them being the potential undercutter with 45% mining power, we find the dominant strategy for the responding rational miner is to typical rational.
Although the iterative double auction has been widely used in many different applications, one of the major problems in its current implementations is that they rely on a trusted third party to handle the auction process. This imposes the risk of single point of failures, monopoly, and bribery. In this article, we aim to tackle this problem by proposing a novel decentralized and trustless framework for iterative double auction based on blockchain. Our design adopts the smart contract and state channel technologies to enable a double auction process among parties that do not need to trust each other, while minimizing the blockchain transactions. In specific, we propose an extension to the original concept of state channels that can support multiparty computation. Then, we provide a formal development of the proposed framework and prove the security of our design against adversaries. Finally, we develop a proof-of-concept implementation of our framework using Elixir and Solidity, on which we conduct various experiments to demonstrate its feasibility and practicality.
David Yakira, Avi Asayag, Ido Grayevsky, Idit Keidar
We study the problem of providing blockchain applications with \emph{economically viable randomness} (EVR), namely, randomness that has significant economic consequences. Applications of EVR include blockchain-based lotteries and gambling. An EVR source guarantees (i) secrecy, assuring that the random bits are kept secret until some predefined condition indicates that they are safe to reveal (e.g., the lottery's ticket sale closes), and (ii) robustness, guaranteeing that the random bits are published once the condition holds. We formalize the EVR problem and solve it on top of an Ethereum-like blockchain abstraction, which supports smart contracts and a transferable native coin. Randomness is generated via a distributed open commit-reveal scheme by game-theoretic agents who strive to maximize their coin holdings. Note that in an economic setting, such agents might profit from breaking secrecy or robustness, and may engage in side agreements (via smart contracts) to this end. Our solution creates an incentive structure that counters such attacks. We prove that following the protocol gives rise to a stable state, called Coalition-Proof Nash Equilibrium, from which no coalition comprised of a subset of the players can agree to deviate. In this stable state, robustness and secrecy are satisfied. Finally, we implement our EVR source over Ethereum.
Ignacio Huitzil, Alvaro Fuentemilla, Fernando Bobillo
This paper proposes a novel extension of blockchain systems with fuzzy ontologies. The main advantage is to let the users have flexible restrictions, represented using fuzzy sets, and to develop smart contracts where there is a partial agreement among the involved parts. We propose a general architecture based on four fuzzy ontologies and a process to develop and run the smart contracts, based on a reduction to a well-known fuzzy ontology reasoning task (Best Satisfiability Degree). We also investigate different operators to compute Pareto-optimal solutions and implement our approach in the Ethereum blockchain.
Tam Bang, Hoang H. Nguyen, Dung Nguyen, Toan Trieu · 5 authors
Ethereum smart contracts based on blockchain technology are powerful and promising applications that provide a global platform for exchanging cryptocurrencies and public services. This technology are garnering a huge impact and is widely adopted in the current times as it can transform the way we transfer and exchange value by passing the need for a middleman and reducing cost. These smart contracts also represent a basis for true ownership of digital assets and a wide range of decentralized applications. Besides this, since Ethereum and its smart contracts are a publicly accessible, unchangeable and distributed platform, they are extremely vulnerable to various forms of attack, with their security becoming a top priority. However, current security-verifying programs tend to provide many technical details which are pretty hard for normal people to understand briefly. To tackle this problem, we designed a process aiming to mitigate these limitations, with our key insight being a combination of semantic structure analysis and symbolic execution on control-flow graphs (CFG for short). This article proposes a new approach for auditing Ethereum smart contracts, applying this technique would benefit both average users without any technical knowledge and security experts as well.
Voting has become one of the methods used by humans to determine decisions. Voting is also often used in determining something that are very important, such as determining people's representative council. In addition, the current voting is still using the Conventional system that uses paper in balloting, and vote counting. This can cause human error. The technology that is increasingly developing in the current era of globalization is e-voting. From this research, an e-vote system will be developed that applies the concept of the block chain node with smart contract. Smart contracts generate unique code for each new election. So that manipulation of election results will not be possible because each voter has only one account and one address block chain. From the results of the test the author can conclude that the smart contract block chain can be used to prove the results of a safe choice and create e-voting that is honest.