Blockchain Papers

Dudek, Paweł

No abstract is available for this record.

Niclas Boehmer, Markus Brill, Alfonso Cevallos, Jonas Gehrlein · 6 authors

We provide the first large-scale data collection of real-world approval-based committee elections. These elections have been conducted on the Polkadot blockchain as part of their Nominated Proof-of-Stake mechanism and contain around one thousand candidates and tens of thousands of (weighted) voters each. We conduct an in-depth study of application-relevant questions, including a quantitative and qualitative analysis of the outcomes returned by different voting rules. Besides considering proportionality measures that are standard in the multiwinner voting literature, we pay particular attention to less-studied measures of overrepresentation, as these are closely related to the security of the Polkadot network. We also analyze how different design decisions such as the committee size affect the examined measures.

Jonas Ballweg, Zhuo Cai, Amir Kafshdar Goharshady

Given n participants, leader election (LE) is the process of designating one of them as the leader or coordinator. LE is ubiquitous in distributed computing and blockchain and has a wide variety of applications ranging from lotteries to proof-of-stake (PoS) protocols and decentralized autonomous organizations (DAOs). In a blockchain setting, we normally require our LE protocol to be decentralized, lead to a consensus about the elected leader, and be fair, i.e. elect each participant with the same probability $1 /n.$ Traditional blockchain LE solutions reduce the problem to decentralized uniform sampling from the set $\{1,2, \ldots, n\}.$ This reduction leads to approaches which are either vulnerable to manipulation, or fail to guarantee fairness, or require inefficient procedures such as verifiable delay functions (VDFs) and publicly-verifiable secret sharing (PVSS), thus making them gas-inefficient and costly when implemented as smart contracts.In this work, we observe that fair leader election can be achieved without explicit decentralized random number generation (RNG). In other words, the intuition behind our work is that RNG is a strictly harder problem than LE. This is because every LE participant is assumed to prefer to be chosen as the leader, e.g. the participant prefers to win the lottery or be the miner for the next PoS block. Thus, they will refrain from actions that would reduce their chance of being selected. This game-theoretic incentive can be exploited to design much simpler protocols for LE in comparison to RNG, by ensuring that dishonest behavior can only reduce the winning chances of the participant.Specifically, we propose PureLottery, a protocol inspired by single-elimination knockout tournaments in sports such as football. We show that PureLottery selects the winner uniformly at random and provides strong game-theoretic guarantees to incentivize honest behavior. PureLottery is also strongly bias-resistant in the sense that every honest participant is guaranteed to win the lottery with probability at least $1 /n$, even if an adversary controls all of the other $n -1$ players. In other words, dishonest behavior will never increase an adversary’s chances of being elected, even if the adversary controls all but one of the participants. Finally, PureLottery is a simple protocol that can be efficiently implemented as a smart contract and uses a small amount of gas in practice. We provide an open-source implementation of the protocol, dedicated to the public domain with no copyright.

Samuel H. Christie, Lalana Kagal, Alessandro Ricci, Munindar P. Singh

The articles in this special section focuses on decentralized systems. Our world is filled with decentralized systems, human society and organizations being the most familiar examples. In such systems, we see multiple loci of ownership or control, representing different parties or administrative domains. That is, the members of a decentralized system are, belong to, or represent different people or organizations. We use the term decentralized system to mean any system formed of autonomous entities, with a special interest in cases where the entities are heterogeneous. Autonomy here refers to the decision-making capacity of an entity, meaning that it decides for itself. In other words, autonomy reflects the freedom to act. Heterogeneity here refers to the design, construction, and configuration of an entity, meaning that it is potentially built on distinct grounds from any other entity. In other words, heterogeneity reflects the freedom of a designer to apply any reasoning method on any available information.

Ioannis Caragiannis, Nikolaj I. Schwartzbach

We study a scenario where an adjudication task (e.g., the resolution of a binary dispute) is outsourced to a set of agents who are appointed as jurors. This scenario is particularly relevant in a Web3 environment, where no verification of the adjudication outcome is possible, and the appointed agents are, in principle, indifferent to the final verdict. We consider simple adjudication mechanisms that use (1) majority voting to decide the final verdict and (2) a payment function to reward the agents with the majority vote and possibly punish the ones in the minority. Agents interact with such a mechanism strategically: they exert some effort to understand how to properly judge the dispute and cast a yes/no vote that depends on this understanding and on information they have about the rest of the votes. Eventually, they vote so that their utility (i.e., their payment from the mechanism minus the cost due to their effort) is maximized. Under reasonable assumptions about how an agent's effort is related to her understanding of the dispute, we show that appropriate payment functions can be used to recover the correct adjudication outcome with high probability. Our findings follow from a detailed analysis of the induced strategic game and make use of both theoretical arguments and simulation experiments.

Xiaotong Sun, Xi Chen, Charalampos Stasinakis, Georgios Sermpinis

Decentralized Autonomous Organization (DAO) provides a decentralized governance solution through blockchain, where decision-making process relies on on-chain voting and follows majority rule. This paper focuses on MakerDAO, and we find three voter coalitions after applying clustering algorithm to voting history. The emergence of a dominant voter coalition is a signal of governance centralization in DAO, and voter coalitions have complicated influence on Maker protocol, which is governed by MakerDAO. This paper presents empirical evidence of multicoalition democracy in DAO and further contributes to the contemporary debate on whether decentralized governance is possible.

Tom Barbereau, Reilly Smethurst, Orestis Papageorgiou, Alexander Rieger · 5 authors

Bitcoin and Ethereum are frequently promoted as decentralized, but developers and academics question their actual decentralization. This motivates further experiments with public permissionless blockchains to achieve decentralization along technical, economic, and political lines. The distribution of tokenized voting rights aims for political decentralization. Tokenized voting rights achieved notoriety within the nascent field of decentralized finance (DeFi) in 2020. As an alternative to centralized crypto-asset exchanges and lending platforms (owned by companies like Coinbase and Celsius), DeFi developers typically create non-custodial projects that are not majority-owned or managed by legal entities. Holders of tokenized voting rights can instead govern DeFi projects. To scrutinize DeFi’s distributed governance strategies, we conducted a multiple-case study of non-custodial, Ethereum-based DeFi projects: Uniswap, Maker, SushiSwap, Yearn Finance, and UMA. Our findings are novel and surprising: quantitative evaluations of DeFi’s distributed governance strategies reveal a failure to achieve political decentralization.

Johan Nygren

Proof-of-vote is a third generation of the Nakamoto consensus. With proof-of-vote, validators compete for people-votes, using proof-of-suffrage given by proof-of-person, and authorize transactions based on authority delegated by the consensus mechanism, just like proof-of-work or proof-of-stake. This logical conclusion of the Nakamoto consensus allows a “nation” of people to secure their own ledger, the equivalent of representative democracy for distributed ledger technology.

Thomas H. Haines, Dirk Pattinson, Mukesh Tiwari

No abstract is available for this record.

Amiya Behera

More details: https://shivarthu.reaudito.com/ Democracy is about fair and equal treatment of everyone in a country. But itbecomes unrealistic to achieve when political parties have their conflict of interest,and leaders don’t have the expertise to make evidence-based policies and neitherhave the skill and manpower for solving problems that surround our society andecosystem. The new fair democracy provides an elegant way of governance thatseparates the representative responsibility according to their specialization and cangrow into any complexity. The governance is divided into various departments, andeach department is supervised by representatives with expertise in the field. Votersneed to have enough knowledge about the departments and their problems, in orderto vote for the selecting representatives of a department. The selection process ofrepresentatives is difficult in and easy out, which allows only serious and utilitarianactors to hold the responsibility, weeding out frivolous ones.

Xuepeng Fan, Peng Li, Yulong Zeng, Xiaoping Zhou

We study the liquid democracy problem, where each voter can either directly vote to a candidate or delegate his voting power to a proxy. We consider the implementation of liquid democracy on the blockchain through Ethereum smart contract and to be compatible with the realtime self-tallying property, where the contract itself can record ballots and update voting status upon receiving each voting massage. A challenge comes due to the gas fee limitation of Ethereum mainnet, that the number of instruction for processing a voting massage can not exceed a certain amount, which restrict the application scenario with respect to algorithms whose time complexity is linear to the number of voters. We propose a fast algorithm to overcome the challenge, such that i) shifts the on-chain initialization to off-chain and ii) the on-chain complexity for processing each voting massage is O(\log n), where n is the number of voters.

Johan Nygren

ABSTRACT: Proof-of-vote is a third generation of the Nakamoto consensus. With proof-of-vote, validators compete for people-votes, using proof-of-suffrage given by proof-of-person, and authorize transactions based on authority delegated by the consensus mechanism, just like proof-of-work or proof-of-stake. This logical conclusion of the Nakamoto consensus allows a “nation” of people to secure their own ledger, the equivalent of representative democracy for distributed ledger technology.

János Flesch, Arkadi Predtetchinski, William D. Sudderth

No abstract is available for this record.

Valerie Laturnus, Alfred Lehar

No abstract is available for this record.

Vitalik Buterin, Zoë Hitzig, E. Glen Weyl

We propose a design for philanthropic or publicly-funded seeding to allow (near) optimal provision of a decentralized, self-organizing ecosystem of public goods. The concept extends ideas from Quadratic Voting to a funding mechanism for endogenous community formation. Individuals make public goods contributions to projects of value to them. The amount received by the project is (proportional to) the square of the sum of the square roots of contributions received. Under the standard model this yields first best public goods provision. Variations can limit the cost, help protect against collusion and aid coordination. We discuss applications to campaign finance, open source software ecosystems, news media finance and urban public projects. More broadly, we offer a resolution to the classic liberal-communitarian debate in political philosophy by providing neutral and non-authoritarian rules that nonetheless support collective organization.

Christian Meter

Countries like Estonia, Norway or Australia developed electronic voting systems, which could be used to realize parliamentary elections with the help of personal computers and the Internet. These systems are completely different in their design and their way to solve the same problem. In this thesis, we analyze some of the largest real-world systems, describe their building blocks and their general design to focus on possible problems in these electronic voting systems. Furthermore, we present a template for an e-voting system, which we designed to try to fulfill the preliminaries and requirements of a secure electronic voting system. We use the experiences and the building blocks of existing systems to combine them to another more secure system. Afterwards, we compare our concept with real-world systems to evaluate the fulfillments of the requirements. Conclusively, we discuss the occurring problems when designing a secure system. Peer-to-peer networks provide many advantages, like decentralization, which might be applicable to electronic voting systems. Therefore, we take a look on the distributed database called blockchain and the usage in a peer-to-peer voting system. Our contribution to this topic is a modification of the proof-of-stake, which enables the usage of common devices, like smartphones or tablets, for the blockchain verification and inclusion of new ballots to the chain. This proof does not need much computing power and has a lower carbon footprint than the proof-of-work in the Bitcoin protocol.

Alban Thomas, Vera Zaporozhets

No abstract is available for this record.

Tjaša Bjedov

This PhD thesis falls within the fields of public finance and public choice. It studies the following issues: ideological polarization, decentralization and conflict. It consists of three chapters can be read independently. In the first chapter the focus is on the importance of ideological polarization between but also within political parties on the level and composition of cantonal public spending. The analysis is on Swiss cantonal parliaments and is based on the use and econometric treatment of a very rich database. We made two contributions to the literature on the impact of political fragmentation on public spending. First, we showed that ideological dispersion within political parties is associated with higher public spending while the dispersion between political parties is associated with less public spending. This finding implies that the mode of organization and discipline within political parties are both important. This result is particularly interesting given that previous literature has completely abstracted from ideological dispersion within political parties. Lastly, we showed that ideological dispersion between and within political parties is mainly relevant for current expenditures. The second chapter focuses on the conflict of objectives that may exist between economic agents in a two-stage game with asymmetric payoffs. The literature showed that coordination failures are frequent in one-stage games and that communication can help individuals coordinate with the use of take turn strategies that allow for a reduction in the payoffs’ inequality in the long run. Our contribution was to study whether communication has the same capacity in a two-stage game where the subgame perfect Nash equilibrium requires both players to make opposite choices at both stages of the game and accept unequal payoffs. Our results show that coordination failures occur half of the time and that 18% of the pairs use the take turn strategy. Communication significantly increases coordination on the subgame perfect Nash equilibrium because it increases the ability of subjects to initiate a take turn strategy and to maintain it. Thus, communication allows subjects to establish a long-term strategy that increases efficiency and reduces payments differences, induced by the asymmetry in payoffs, by exchanging their relative positions in a fair way. Our results show that communication can solve coordination conflicts, even in more complex situations than in one-stage games usually studied until now. The last chapter focuses on a particular type of conflict: political secessions. Specifically, it addresses the link between secessions, decentralization and group identity. We aim at determining, by means of a laboratory experiment, if decentralizing the provision of public goods reduces the likelihood of secession. We emphasize the importance of local identity. Our experimental design, obviously, do not reproduce all the trade-offs that separatist movements face in the real world. It allows, however, capturing at least two key forces that drive these movements: the proximity to public goods that reduces the phenomena of free-riding and brings public goods closer to citizens’ preferences and the importance of local identities. Our results indicate that the Decentralization treatment increases contributions to local public goods and decreases the likelihood of secessions also when identity is made more salient. If fact, reinforcing local group identity increases the likelihood of secession only when local group members are cooperators.

Yutaka Suzuki

This paper uses a contract theory framework to analyze the mechanisms of eurozone financial governance, with a focus on centralization vs. decentralization and incentive problems. By constructing a Stackelberg game model with n Ministries of Finance as the first movers and the European Central Bank as the second mover, we show that each government can create growth in its own country (self-benefit) by increasing government spending, but that this will increase inflation, resulting in a decrease in the value of the euro. As these effects are shared equally by eurozone countries (cost sharing), an incentive to free-ride at the expense of other countries is present. We then analyze a penalty-based solution to the free-rider problem and derive a second-best solution where a commitment not to renegotiate penalties ex-post is impossible. The optimal solution shows that ¡°limited sovereignty, ¡± that is, substantially constrained fiscal sovereignty, should be imposed as a high marginal cost for the issuance of public debt. Finally, we close the paper by discussing the possibility of Fiscal Integration (Fiscal Union).

Ali Kakhbod, Joseph C. Koo, Demosthenis Teneketzis

We present a decentralized message exchange process (tatonnement process) for determining the level at which a certain public good will be provided to a set of individuals who finance the cost of attaining that level. The message exchange process we propose requires minimal coordination overhead and converges to the optimal solution of the corresponding centralized problem.

Camelia Bejan, Juan Camilo Gómez

A family of core extensions for cooperative TU-games is introduced. These solution concepts are non-empty when applied to non-balanced games yet coincide with the core whenever the core is non-empty. The extensions suggest how an exogenous regulator can sustain a stable and efficient outcome, financing a subsidy via individual taxes. Economic and geometric properties of the solution concepts are studied. When taxes are proportional, the proportional prenucleolus is proposed as a single-valued selection device. An application of these concepts to the decentralization of a public goods economy is discussed.

Benjamin Lünenbürger

River floods can be very damaging. Since numerous human responses to floods are possible, the question arises: What is the organization of flood management that leads to the most efficient results? The dissertation first considers flooding and flood management in Germany. Based on that analysis, a theoretical, political-economy model of public flood defense is developed. The basic model is then extended to allow migration between upstream and downstream regions as well as between flood-prone areas and zones without risk. As different flood protection measures have quite different spatial characteristics, the distribution of responsibilities between the different actors is decisive for the overall performance of flood management. The distribution of public responsibilities among the different federal actors is crucial for two reasons. First, there are unidirectional upstream-downstream spillovers that raise the question whether decentralized or centralized provision of public goods is more efficient. Second, benefits from flood protection are concentrated to flood-prone areas near rivers. This concentration creates a natural heterogeneity of preferences for flood defense. These two aspects are also relevant for other issues in water management. Unidirectional spillovers and spatially heterogeneous preferences for public goods challenge the federal organization of flood defense. Following the lead of recent political-economy contributions to fiscal federalism, both aspects are investigated in a two region model with majority voting. Four different decision-making structures are compared: classical decentralization or centralization (based on jurisdictions containing voters both with and without preferences for the public good) and decentralized or centralized single issue authorities (whose jurisdictions, by definition, contain only high preference voters). Decentralized jurisdictions separate upstream and downstream voters, whereas a centralized jurisdiction comprises both groups. It turns out that centralized jurisdictions lead to a very low public good surplus and that either classical decentralization or decentralized single issue authorities achieve the best results under most conditions. The centralized provision of public goods is flawed because there is either an extreme over- or an extreme under-provision of the downstream public good. This can, however, be mitigated if there is a common standard for flood protection or if only the upstream provision of the public good is centralized. Whether or not these two solutions are beneficial depends on the magnitude of spillovers and also on the voting majorities in the two regions. Expanding the model to consider migration led to more complex results. First, citizens can migrate to flood-prone areas. Such migration flows can be induced by too large public flood defense, which is favored if citizens outside of flood-prone areas also finance the public good. Second, migration flow is also influenced by spillovers. The socially efficient population distribution is U-shaped with respect to spillovers. With symmetry assumptions, negative as well as positive unidirectional spillovers favour larger downstream populations. With myopic voters that neglect migration flow, this pattern is not achieved and the downstream population is large for positive spillovers and small for negative spillovers. Centralized jurisdictions are preferable to decentralized ones for smaller spillover effects if migration is possible. This argument is even stronger if voters take migration responses to the provision of public goods into account. The results shed light not only on the federal organization of flood management, but also on the institutional difficulties that arise from the current policy paradigm of the river basin approach to water management.

Fred E Foldvary

Abstract. This paper examines the process of mass democracy as the fundamental cause of transfer seeking and the centralization of governance, using Austrian-school theory and methodology such as decentralized knowledge, disaggregated phenomena, and the structure of capital goods. The alternative of decentralized, small-group gov-ernance reduces the demand for campaign financing and makes more effective use of decentralized knowledge. In addition, when public revenues originate in the local districts and are passed on to higher levels of governance, it provides incentives for revenue sources which do not have an excess burden on production. The governance struc-ture of cellular, bottom-up, multi-level voting, with public revenue flowing up from the lower to the upper levels, provides a contrast for a comparative systems analysis that can yield insight into the transfer seeking endemic in mass democracy.

Kinji Mori

No abstract is available for this record.