Blockchain Papers

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536 papersLast indexed Aug 31, 2026
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May 20, 2025·arXiv
0 cites
Game of Trust: How Trustworthy Does Your Blockchain Think You Are?

Petros Drineas, Rohit Nema, Rafail Ostrovsky, Vassilis Zikas

We investigate how a blockchain can distill the collective belief of its nodes regarding the trustworthiness of a (sub)set of nodes into a {\em reputation system} that reflects the probability of correctly performing a task. To address this question, we introduce a framework that breaks it down into two sub-problems: 1. (Information Extraction): How can the system distill trust information from a function of the nodes' true beliefs? 2. (Incentive Design): How can we incentivize nodes to truthfully report such information? To tackle the first sub-problem, we adapt, in a non-trivial manner, the well-known PageRank algorithm to our problem. For the second, we define a new class of games, called Trustworthy Reputation games (TRep games), which aim to extract the collective beliefs on trust from the actions of rational participants. We then propose a concrete TRep game whose utility function leverages Personalized PageRank and can be instantiated through a straightforward blockchain rewards mechanism. Building on this, we show how the TRep game enables the design of a reputation system. Such systems can enhance the robustness, scalability, and efficiency of blockchain and DeFi solutions. For instance, we demonstrate how such a system can be used within a Proof-of-Reputation blockchain.

Open access
cs.GT
cs.AI
cs.CR
Original source
May 19, 2025·arXiv
0 cites
Multiple Proposer Transaction Fee Mechanism Design: Robust Incentives Against Censorship and Bribery

Aikaterini-Panagiota Stouka, Julian Ma, Thomas Thiery

Transaction Fee Mechanism (TFM) design in blockchain protocols has gained significant attention following the pioneering work of Roughgarden [EC' 21], which established a formal framework for analyzing user and block proposer incentives under various Transaction Fee Mechanisms, including Ethereum's current fee mechanism EIP-1559. However, the original TFM framework and follow-up TFM works overlook the critical challenge of censorship resistance-specifically in the presence of an external malicious actor who is willing to bribe the proposer to censor a transaction. In this paper, we extend the Roughgarden's framework to capture censorship resistance under bribery attacks via a Bayesian game, where a strategic block proposer's "type" is determined by a bribe function from an external malicious actor. Under this framework, the definition of a standard TFM is extended to a bribery-aware TFM. This technique is broadly applicable to analyze censorship resistance under bribery attacks of both single and multiple proposer protocols within the original TFM scope. We choose to utilize it to evaluate the incentive compatibility and censorship resistance of several TFMs within the context of a multiple proposer protocol called Fork-Choice Enforced Inclusion Lists (FOCIL). FOCIL represents a critical evolution in the Ethereum roadmap, serving as the consensus and censorship resistance flagship for the upcoming Hegota hard fork. It aims to bolster Ethereum's censorship resistance by enabling multiple proposers to contribute to block construction. While recent works such as Garimidi et al.[FC' 25] have extended the TFM framework to multiple proposer settings, they do not aim to capture censorship under bribery attacks and they are not compatible with the unique hierarchical structure of FOCIL.

Open access
cs.GT
cs.CR
Original source
May 8, 2025·arXiv
0 cites
Timestamp Manipulation: Timestamp-based Nakamoto-style Blockchains are Vulnerable

Junjie Hu, Sisi Duan

Nakamoto consensus are the most widely adopted decentralized consensus mechanism in cryptocurrency systems. Since it was proposed in 2008, many studies have focused on analyzing its security. Most of them focus on maximizing the profit of the adversary. Examples include the selfish mining attack [FC '14] and the recent riskless uncle maker (RUM) attack [CCS '23]. In this work, we introduce the Staircase-Unrestricted Uncle Maker (SUUM), the first block withholding attack targeting the timestamp-based Nakamoto-style blockchain. Through block withholding, timestamp manipulation, and difficulty risk control, SUUM adversaries are capable of launching persistent attacks with zero cost and minimal difficulty risk characteristics, indefinitely exploiting rewards from honest participants. This creates a self-reinforcing cycle that threatens the security of blockchains. We conduct a comprehensive and systematic evaluation of SUUM, including the attack conditions, its impact on blockchains, and the difficulty risks. Finally, we further discuss four feasible mitigation measures against SUUM.

Open access
cs.CR
cs.GT
Original source
May 7, 2025·arXiv (Cornell University)
0 cites
Delegation and Participation in Decentralized Governance: An Epistemic View

Jeff Strnad

We develop and apply epistemic tests to various decentralized governance methods as well as to study the impact of participation. These tests probe the ability to reach a correct outcome when there is one. We find that partial abstention is a strong governance method from an epistemic standpoint compared to alternatives such as various forms of ``transfer delegation" in which voters explicitly transfer some or all of their voting rights to others. We make a stronger case for multi-step transfer delegation than is present in previous work but also demonstrate that transfer delegation has inherent epistemic weaknesses. We show that enhanced direct participation, voters exercising their own voting rights, can have a variety of epistemic impacts, some very negative. We identify governance conditions under which additional direct participation is guaranteed to do no epistemic harm and is likely to increase the probability of making correct decisions. In light of the epistemic challenges of voting-based decentralized governance, we consider the possible supplementary use of prediction markets, auctions, and AI agents to improve outcomes. All these results are significant because epistemic performance matters if entities such as DAOs (decentralized autonomous organizations) wish to compete with organizations that are more centralized.

Open access
2 source records
Game Theory and Voting Systems
Epistemology, Ethics, and Metaphysics
Ethics and Social Impacts of AI
Original source
May 6, 2025·arXiv
0 cites
Airdrop Games

Sotiris Georganas, Aggelos Kiayias, Paolo Penna

Launching a new blockchain system or application is frequently facilitated by a so called airdrop, where the system designer chooses a pre-existing set of potentially interested parties and allocates newly minted tokens to them with the expectation that they will participate in the system - such engagement, especially if it is of significant level, facilitates the system and raises its value and also the value of its newly minted token, hence benefiting the airdrop recipients. A number of challenging questions befuddle designers in this setting, such as how to choose the set of interested parties and how to allocate tokens to them. To address these considerations we put forward a game-theoretic model for such airdrop games. Our model can be used to guide the designer's choices based on the way the system's value depends on participation (modeled by a ''technology function'' in our framework) and the costs that participants incur. We identify both bad and good equilibria and identify the settings and the choices that can be made where the designer can influence the players towards good equilibria in an expedient manner.

Open access
cs.GT
Original source
Apr 25, 2025·arXiv
0 cites
A Composable Game-Theoretic Framework for Blockchains

Zeta Avarikioti, Georg Fuchsbauer, Pim Keer, Matteo Maffei · 5 authors

Blockchains rely on economic incentives to ensure secure and decentralised operation, making incentive compatibility a core design concern. However, protocols are rarely deployed in isolation. Applications interact with the underlying consensus and network layers, and multiple protocols may run concurrently on the same chain. These interactions give rise to complex incentive dynamics that traditional, isolated analyses often fail to capture. We propose the first compositional game-theoretic framework for blockchain protocols. Our model represents blockchain protocols as interacting games across the application, network, and consensus layers. It enables formal reasoning about incentive compatibility under composition by introducing two key abstractions: the cross-layer game, which models how strategies in one layer influence others, and cross-application composition, which captures how application protocols interact concurrently through shared infrastructure. We illustrate our framework through case studies on Hashed Timelock Contracts (HTLCs), Layer-2 protocols, and Maximal Extractable Value (MEV) showing how compositional analysis reveals new subtle incentive vulnerabilities and supports modular security proofs. Also, by introduction of a novel rational miner model, we derive new conditions for the robustness of timelocks to bribing attacks.

Open access
cs.GT
cs.CE
Original source
Apr 22, 2025·arXiv
0 cites
A Line Graph-Based Framework for Identifying Optimal Routing Paths in Decentralized Exchanges

Yu Zhang, Yafei Li, Claudio Tessone

Decentralized exchanges, such as those employing constant product market makers (CPMMs) like Uniswap V2, play a crucial role in the blockchain ecosystem by enabling peer-to-peer token swaps without intermediaries. Despite the increasing volume of transactions, there remains limited research on identifying optimal trading paths across multiple DEXs. This paper presents a novel line-graph-based algorithm (LG) designed to efficiently discover profitable trading routes within DEX environments. We benchmark LG against the widely adopted Depth-First Search (DFS) algorithm under a linear routing scenario, encompassing platforms such as Uniswap, SushiSwap, and PancakeSwap. Experimental results demonstrate that LG consistently identifies trading paths that are as profitable as, or more profitable than, those found by DFS, while incurring comparable gas costs. Evaluations on Uniswap V2 token graphs across two temporal snapshots further validate LG's performance. Although LG exhibits exponential runtime growth with respect to graph size in empirical tests, it remains viable for practical, real-world use cases. Our findings underscore the potential of the LG algorithm for industrial adoption, offering tangible benefits to traders and market participants in the DeFi space.

Open access
q-fin.CP
cs.GT
Original source
Apr 21, 2025·arXiv
0 cites
Does Your Blockchain Need Multidimensional Transaction Fees?

Nir Lavee, Noam Nisan, Mallesh Pai, Max Resnick

Blockchains have block-size limits to ensure the entire cluster can keep up with the tip of the chain. These block-size limits are usually single-dimensional, but richer multidimensional constraints allow for greater throughput. The potential for performance improvements from multidimensional resource pricing has been discussed in the literature, but exactly how big those performance improvements are remains unclear. In order to identify the magnitude of additional throughput that multi-dimensional transaction fees can unlock, we introduce the concept of an $α$-approximation. A constraint set $C_1$ is $α$-approximated by $C_2$ if every block feasible under $C_1$ is also feasible under $C_2$ once all resource capacities are scaled by a factor of $α$ (e.g., $α=2$ corresponds to doubling all available resources). We show that the $α$-approximation of the optimal single-dimensional gas measure corresponds to the value of a specific zero-sum game. However, the more general problem of finding the optimal $k$-dimensional approximation is NP-complete. Quantifying the additional throughput that multi-dimensional fees can provide allows blockchain designers to make informed decisions about whether the additional capacity unlocked by multidimensional constraints is worth the additional complexity they add to the protocol.

Open access
cs.GT
econ.TH
Original source
Apr 17, 2025·arXiv (Cornell University)
0 cites
Enhancing Decentralization in Blockchain Decision-Making Through Quadratic Voting and Its Generalization

Lyudmila Kovalchuk, Mariia Rodinko, Roman Oliynykov, Andrii Nastenko · 6 authors

This study explores the application of Quadratic Voting (QV) and its generalization to improve decentralization and effectiveness in blockchain governance systems. The conducted research identified three main types of quadratic (square root) voting. Two of them pertain to voting with a split stake, and one involves voting without splitting. In split stakes, Type 1 QV applies the square root to the total stake before distributing it among preferences, while Type 2 QV distributes the stake first and then applies the square root. In unsplit stakes (Type 3 QV), the square root of the total stake is allocated entirely to each preference. The presented formal proofs confirm that Types 2 and 3 QV, along with generalized models, enhance decentralization as measured by the Gini and Nakamoto coefficients. A pivotal discovery is the existence of a threshold stakeholder whose relative voting ratio increases under QV compared to linear voting, while smaller stakeholders also gain influence. The generalized QV model allows flexible adjustment of this threshold, enabling tailored decentralization levels. Maintaining fairness, QV ensures that stakeholders with higher stakes retain a proportionally greater voting ratio while redistributing influence to prevent excessive concentration. It is shown that to preserve fairness and robustness, QV must be implemented alongside privacy-preserving cryptographic voting protocols, as voters casting their ballots last could otherwise manipulate outcomes. The generalized QV model, proposed in this paper, enables algorithmic parametrization to achieve desired levels of decentralization for specific use cases. This flexibility makes it applicable across diverse domains, including user interaction with cryptocurrency platforms, facilitating community events and educational initiatives, and supporting charitable activities through decentralized decision-making.

Open access
2 source records
Blockchain Technology Applications and Security
Internet Traffic Analysis and Secure E-voting
Mobile Crowdsensing and Crowdsourcing
Original source
Apr 15, 2025·arXiv
0 cites
Mosaic: Client-driven Account Allocation Framework in Sharded Blockchains

Yuanzhe Zhang, Shirui Pan, Jiangshan Yu

Recent account allocation studies in sharded blockchains are typically miner-driven, requiring miners to perform global optimizations for all accounts to enhance system-wide performance. This forces each miner to maintain a complete copy of the entire ledger, resulting in significant storage, communication, and computation overhead. In this work, we explore an alternative research direction by proposing Mosaic, the first client-driven framework for distributed, lightweight local optimization. Rather than relying on miners to allocate all accounts, Mosaic enables clients to independently execute a local algorithm to determine their residing shards. Clients can submit migration requests to a beacon chain when relocation is necessary. Mosaic naturally addresses key limitations of miner-driven approaches, including the lack of miner incentives and the significant overhead. While clients are flexible to adopt any algorithm for shard allocation, we design and implement a reference algorithm, Pilot, to guide them. Clients execute Pilot to maximize their own benefits, such as reduced transaction fees and confirmation latency. On a real-world Ethereum dataset, we implement and evaluate Pilot against state-of-the-art miner-driven global optimization solutions. The results demonstrate that Mosaic significantly enhances computational efficiency, achieving a four-order-of-magnitude reduction in computation time, with the reduced input data size from 1.44 GB to an average of 228.66 bytes per account. Despite these efficiency gains, Pilot introduces only about a 5% increase in the cross-shard ratio and maintains approximately 98% of the system throughput, demonstrating a minimal trade-off in overall effectiveness.

Open access
cs.DC
cs.DB
cs.GT
Original source
Apr 10, 2025·arXiv
0 cites
Opportunity-Cost-Driven Reward Mechanisms for Crowd-Sourced Computing Platforms

Shuhao Zheng, Ziyue Xin, Zonglun Li, Xue Liu

This paper introduces a game-theoretic model tailored for reward distribution on crowd-sourced computing platforms. It explores a repeated game framework where miners, as computation providers, decide their computation power contribution in each round, guided by the platform's designed reward distribution mechanism. The reward for each miner in every round is based on the platform's randomized task payments and the miners' computation transcripts. Specifically, it defines Opportunity-Cost-Driven Incentive Compatibility (OCD-IC) and Dynamic OCD-IC (DOCD-IC) for scenarios where strategic miners might allocate some computation power to more profitable activities, such as Bitcoin mining. The platform must also achieve Budget Balance (BB), aiming for a non-negative total income over the long term. This paper demonstrates that traditional Pay-Per-Share (PPS) reward schemes require assumptions about task demand and miners' opportunity costs to ensure OCD-IC and BB, yet they fail to satisfy DOCD-IC. The paper then introduces Pay-Per-Share with Subsidy (PPSS), a new reward mechanism that allows the platform to provide subsidies to miners, thus eliminating the need for assumptions on opportunity cost to achieve OCD-IC, DOCD-IC, and long-term BB.

Open access
cs.GT
Original source
Apr 7, 2025·arXiv
0 cites
Hollow Victory: How Malicious Proposers Exploit Validator Incentives in Optimistic Rollup Dispute Games

Suhyeon Lee

Blockchain systems, such as Ethereum, are increasingly adopting layer-2 scaling solutions to improve transaction throughput and reduce fees. One popular layer-2 approach is the Optimistic Rollup, which relies on a mechanism known as a dispute game for block proposals. In these systems, validators can challenge blocks that they believe contain errors, and a successful challenge results in the transfer of a portion of the proposer's deposit as a reward. In this paper, we reveal a structural vulnerability in the mechanism: validators may not be awarded a proper profit despite winning a dispute challenge. We develop a formal game-theoretic model of the dispute game and analyze several scenarios, including cases where the proposer controls some validators and cases where a secondary auction mechanism is deployed to induce additional participation. Our analysis demonstrates that under current designs, the competitive pressure from validators may be insufficient to deter malicious behavior. We find that increased validator competition, paradoxically driven by higher rewards or participation, can allow a malicious proposer to significantly lower their net loss by capturing value through mechanisms like auctions. To address this, we propose countermeasures such as an escrowed reward mechanism and a commit-reveal protocol. Our findings provide critical insights into enhancing the economic security of layer-2 scaling solutions in blockchain networks.

Open access
cs.GT
cs.CR
Original source
Apr 2, 2025·arXiv
0 cites
Accelerating Blockchain Scalability: New Models for Parallel Transaction Execution in the EVM

Souradeep Das, Konpat Preechakul, Jonas Bäumer, Riddhi Patel · 5 authors

As the number of decentralized applications and users on Ethereum grows, the ability of the blockchain to efficiently handle a growing number of transactions becomes increasingly strained. Ethereums current execution model relies heavily on sequential processing, meaning that operations are processed one after the other, which creates significant bottlenecks to future scalability demands. While scalability solutions for Ethereum exist, they inherit the limitations of the EVM, restricting the extent to which they can scale. This paper proposes a novel solution to enable maximally parallelizable executions within Ethereum, built out of three self-sufficient approaches. These approaches include strategies in which Ethereum transaction state accesses could be strategically and efficiently predetermined, and further propose how the incorporation of gas based incentivization mechanisms could enforce a maximally parallelizable network.

Open access
cs.DC
cs.CE
cs.GT
Original source
Mar 23, 2025·arXiv
0 cites
A Curationary Tale: Logarithmic Regret in DeFi Lending via Dynamic Pricing

Tarun Chitra

Lending within decentralized finance (DeFi) has facilitated over \$100 billion of loans since 2020. A long-standing inefficiency in DeFi lending protocols such as Aave is the use of static pricing mechanisms for loans. These mechanisms have been shown to maximize neither welfare nor revenue for participants in DeFi lending protocols. Recently, adaptive supply models pioneered by Morpho and Euler have become a popular means of dynamic pricing for loans. This pricing is facilitated by agents known as curators, who bid to match supply and demand. We construct and analyze an online learning model for static and dynamic pricing models within DeFi lending. We show that when loans are small and have a short duration relative to an observation time $T$, adaptive supply models achieve $O(\log T)$ regret, while static models cannot achieve better than $Ω(\sqrt{T})$ regret. We then study competitive behavior between curators, demonstrating that adaptive supply mechanisms maximize revenue and welfare for both borrowers and lenders.

Open access
cs.GT
q-fin.RM
Original source
Mar 21, 2025·arXiv
3 cites
NFTs as a Data-Rich Test Bed: Conspicuous Consumption and its Determinants

Taylor Lundy, Narun Raman, Scott Duke Kominers, Kevin Leyton‐Brown

Conspicuous consumption occurs when a consumer derives value from a good based on its social meaning as a signal of wealth, taste, and/or community affiliation. Common conspicuous goods include designer footwear, country club memberships, and artwork; conspicuous goods also exist in the digital sphere, with non-fungible tokens (NFTs) as a prominent example. The NFT market merits deeper study for two key reasons: first, it is poorly understood relative to its economic scale; and second, it is unusually amenable to analysis because NFT transactions are publicly available on the blockchain, making them useful as a test bed for conspicuous consumption dynamics. This paper introduces a model that incorporates two previously identified elements of conspicuous consumption: the \emph{bandwagon effect} (goods increase in value as they become more popular) and the \emph{snob effect} (goods increase in value as they become rarer). Our model resolves the apparent tension between these two effects, exhibiting net complementarity between others' and one's own conspicuous consumption. We also introduce a novel dataset combining NFT transactions with embeddings of the corresponding NFT images computed using an off-the-shelf vision transformer architecture. We use our dataset to validate the model, showing that the bandwagon effect raises an NFT collection's value as more consumers join, while the snob effect drives consumers to seek rarer NFTs within a given collection.

Open access
2 source records
Consumer Behavior in Brand Consumption and Identification
Consumer Market Behavior and Pricing
Consumer Retail Behavior Studies
Original source
Mar 19, 2025·arXiv
0 cites
Role-Selection Game in Block Production under Proposer-Builder Separation

Yanzhen Li, Zining Wang

To address the risks of validator centralization, Proposer-Builder Separation (PBS) was introduced in Ethereum to divide the roles of block building and block proposing, fostering a more equitable and decentralized block production environment. PBS creates a two-sided market in which searchers submit valuable bundles to builders for inclusion in blocks, while builders compete in auctions for block proposals. In this paper, we formulate and analyze a role-selection game that models how profit-seeking participants in PBS strategically choose between acting as searchers or builders, using a co-evolutionary framework to capture the complex interactions and payoff dynamics in this market. Through agent-based simulations, we demonstrate that agents' optimal role-acting as searcher or builder-responds dynamically to the probability of conflict between bundles. Our empirical game-theoretic analysis quantifies the equilibrium frequencies of role selection under different market conditions, revealing that low conflict probabilities lead to equilibria dominated by searchers, while higher probabilities shift equilibrium toward builders. Additionally, bundle conflicts have non-monotonic effects on agent payoffs and strategy evolution. Our results advance the understanding of decentralized block building and provide guidance for designing fairer and more robust block production mechanisms in blockchain systems.

Open access
cs.GT
cs.DC
Original source
Mar 18, 2025·arXiv
0 cites
Toward Resilient Airdrop Mechanisms: Empirical Measurement of Hunter Profits and Airdrop Game Theory Modeling

Junliang Luo, Hong Kang, Shuhao Zheng, Xue Liu

Airdrops issued by platforms are to distribute tokens, drive user adoption, and promote decentralized services. The distributions attract airdrop hunters (attackers), who exploit the system by employing Sybil attacks, i.e., using multiple identities to manipulate token allocations to meet eligibility criteria. While debates around airdrop hunting question the potential benefits to the ecosystem, exploitative behaviors like Sybil attacks clearly undermine the system's integrity, eroding trust and credibility. Despite the increasing prevalence of these tactics, a gap persists in the literature regarding systematic modeling of airdrop hunters' costs and returns, alongside the theoretical models capturing the interactions among all roles for airdrop mechanism design. Our study first conducts an empirical analysis of transaction data from the Hop Protocol and LayerZero, identifying prevalent attack patterns and estimating hunters' expected profits. Furthermore, we develop a game-theory model that simulates the interactions between attackers, organizers, and bounty hunters, proposing optimal incentive structures that enhance detection while minimizing organizational costs.

Open access
cs.GT
Original source
Mar 13, 2025·arXiv
0 cites
Optimal Reward Allocation via Proportional Splitting

Lukas Aumayr, Zeta Avarikioti, Dimitris Karakostas, Karl Kreder · 5 authors

Following the publication of Bitcoin's arguably most famous attack, selfish mining, various works have introduced mechanisms to enhance blockchain systems' game theoretic resilience. Some reward mechanisms, like FruitChains, have been shown to be equilibria in theory. However, their guarantees assume non-realistic parameters and their performance degrades significantly in a practical deployment setting. In this work we introduce a reward allocation mechanism, called Proportional Splitting (PRS), which outperforms existing state of the art. We show that, for large enough parameters, PRS is an equilibrium, offering the same theoretical guarantees as the state of the art. In addition, for practical, realistically small, parameters, PRS outperforms all existing reward mechanisms across an array of metrics. We implement PRS on top of a variant of PoEM, a Proof-of-Work (PoW) protocol that enables a more accurate estimation of each party's mining power compared to e.g., Bitcoin. We then evaluate PRS both theoretically and in practice. On the theoretical side, we show that our protocol combined with PRS is an equilibrium and guarantees fairness, similar to FruitChains. In practice, we compare PRS with an array of existing reward mechanisms and show that, assuming an accurate estimation of the mining power distribution, it outperforms them across various well-established metrics. Finally, we realize this assumption by approximating the power distribution via low-work objects called "workshares" and quantify the tradeoff between the approximation's accuracy and storage overhead.

Open access
cs.GT
cs.CR
Original source
Mar 7, 2025·arXiv
0 cites
Using "Failure Costs" to Guarantee Execution Quality in Competitive and Permissionless Order Flow Auctions

Alex Watts, Davide Sinesi, Jacob Greene

In the context of decentralized blockchains, accurately simulating the outcome of order flow auctions (OFAs) off-chain is challenging due to adversarial sequencing, encrypted bids, and frequent state changes. Existing approaches, such as deterministic sorting via consensus layer modifications (e.g., MEV taxes) (Robinson and White 2024) and BRAID (Resnick 2024) or atomic execution of aggregated bids (e.g., Atlas) (Watts et al. 2024), remain vulnerable in permissionless settings where limited throughput allows rational adversaries to submit "spoof" bids that block their competitors' access to execution. We propose a new failure cost penalty that applies only when a solution is executed but does not pay its bid or fulfill the order. Combined with an on-chain escrow system, this mechanism empowers applications to asynchronously issue their users a guaranteed minimum outcome before the execution results are finalized. It implies a direct link between blockchain throughput, censorship resistance, and the capital efficiency of auction participants (e.g., solvers), which intuitively extends to execution quality. At equilibrium, bids fully reflect the potential for price improvement between bid submission and execution, but only partially reflect the potential for price declines. This asymmetry unbounded upside for winning bids, limited downside for failed bids, and no loss for losing bids - ultimately benefits users.

Open access
cs.GT
econ.TH
Original source
Feb 28, 2025·arXiv
0 cites
Elastic Restaking Networks

Roi Bar-Zur, Ittay Eyal

Many blockchain-based decentralized services require their validators (operators) to deposit stake (collateral), which is forfeited (slashed) if they misbehave. Restaking networks let validators secure multiple services by reusing stake. These networks have quickly gained traction, leveraging over \$20 billion in stake. However, restaking introduces a new attack vector where validators can coordinate to misbehave across multiple services simultaneously, extracting digital assets while forfeiting their stake only once. Previous work focused either on preventing coordinated misbehavior or on protecting services if all other services are Byzantine and might unjustly cause slashing due to bugs or malice. The first model overlooks how a single Byzantine service can collapse the network, while the second ignores shared-stake benefits. To bridge the gap, we analyze the system as a strategic game of coordinated misbehavior, when a given fraction of the services are Byzantine. We introduce elastic restaking networks, where validators can allocate portions of their stake that may cumulatively exceed their total stake, and when allocations are lost, the remaining stake stretches to cover remaining allocations. We show that elastic networks exhibit superior robustness compared to previous approaches, and demonstrate a synergistic effect where an elastic restaking network enhances its blockchain's security, contrary to community concerns of an opposite effect in existing networks. We then design incentives for tuning validators' allocations. Our elastic restaking system and incentive design have immediate practical implications for deployed restaking networks.

Open access
cs.GT
cs.DC
Original source
Feb 27, 2025·arXiv
0 cites
Selfish Mining under General Stochastic Rewards

Maryam Bahrani, Michael Neuder, S. Matthew Weinberg

Selfish miners selectively withhold blocks to earn disproportionately high revenue. The vast majority of the selfish mining literature focuses exclusively on block rewards. Carlsten et al. [2016] is a notable exception, observing that similar strategic behavior is profitable in a zero-block-reward regime (the endgame for Bitcoin's quadrennial halving schedule) if miners are compensated with transaction fees alone. Neither model fully captures miner incentives today. The block reward remains 3.125 BTC, yet some blocks yield significantly higher revenue. For example, congestion during the launch of the Babylon protocol in August 2024 caused transaction fees to spike to 9.52 BTC. Our results are both practical and theoretical. Of practical interest, we study selfish mining profitability under a combined reward function that more accurately models miner incentives. This analysis enables us to make quantitative claims about protocol risk (e.g., the mining power at which a selfish strategy becomes profitable is reduced by 22% when optimizing over the combined reward function versus block rewards alone) and qualitative observations (e.g., a miner considering both block rewards and transaction fees will mine more or less aggressively respectively). These practical results follow from our novel model and methodology, which constitute our theoretical contributions. We model general, time-accruing stochastic rewards, which requires explicit treatment of difficult adjustment and randomness; we characterize reward function structure through a set of properties (e.g., that rewards accrue only as a function of time). We present a new methodology to analytically calculate expected selfish miner rewards under a broad class of stochastic reward functions and validate our method numerically by comparing it with the existing literature and simulating the combined reward sources directly.

Open access
cs.GT
Original source
Feb 27, 2025·arXiv
2 cites
Economic Censorship Games in Fraud Proofs

Ben Berger, Edward W. Felten, Akaki Mamageishvili, Benny Sudakov

Optimistic rollups rely on fraud proofs -- interactive protocols executed on Ethereum to resolve conflicting claims about the rollup's state -- to scale Ethereum securely. To mitigate against potential censorship of protocol moves, fraud proofs grant participants a significant time window, known as the challenge period, to ensure their moves are processed on chain. Major optimistic rollups today set this period at roughly one week, mainly to guard against strong censorship that undermines Ethereum's own crypto-economic security. However, other forms of censorship are possible, and their implication on optimistic rollup security is not well understood. This paper considers economic censorship attacks, where an attacker censors the defender's transactions by bribing block proposers. At each step, the attacker can either censor the defender -- depleting the defender's time allowance at the cost of the bribe -- or allow the current transaction through while conserving funds for future censorship. We analyze three game theoretic models of these dynamics and determine the challenge period length required to ensure the defender's success, as a function of the number of required protocol moves and the players' available budgets.

Open access
2 source records
cs.GT
Auction Theory and Applications
Crime, Illicit Activities, and Governance
Original source
Feb 27, 2025·arXiv
0 cites
On the Welfare of EIP-1559 with Patient Bidders

Moshe Babaioff, Noam Nisan

The ``EIP-1599 algorithm'' is used by the Ethereum blockchain to assemble transactions into blocks. While prior work has studied it under the assumption that bidders are ``impatient'', we analyze it under the assumption that bidders are ``patient'', which better corresponds to the fact that unscheduled transactions remain in the mempool and can be scheduled at a later time. We show that with ``patient'' bidders, this algorithm produces schedules of near-optimal welfare, provided it is given a mild resource augmentation (that does not increase with the time horizon). We prove some generalizations of the basic theorem, establish lower bounds that rule out several candidate improvements and extensions, and propose several questions for future work.

Open access
cs.GT
Original source
Feb 24, 2025·arXiv
0 cites
Survey on Strategic Mining in Blockchain: A Reinforcement Learning Approach

Jichen Li, Lijia Xie, Hanting Huang, Bo Zhou · 8 authors

Strategic mining attacks, such as selfish mining, exploit blockchain consensus protocols by deviating from honest behavior to maximize rewards. Markov Decision Process (MDP) analysis faces scalability challenges in modern digital economics, including blockchain. To address these limitations, reinforcement learning (RL) provides a scalable alternative, enabling adaptive strategy optimization in complex dynamic environments. In this survey, we examine RL's role in strategic mining analysis, comparing it to MDP-based approaches. We begin by reviewing foundational MDP models and their limitations, before exploring RL frameworks that can learn near-optimal strategies across various protocols. Building on this analysis, we compare RL techniques and their effectiveness in deriving security thresholds, such as the minimum attacker power required for profitable attacks. Expanding the discussion further, we classify consensus protocols and propose open challenges, such as multi-agent dynamics and real-world validation. This survey highlights the potential of reinforcement learning (RL) to address the challenges of selfish mining, including protocol design, threat detection, and security analysis, while offering a strategic roadmap for researchers in decentralized systems and AI-driven analytics.

Open access
cs.LG
cs.GT
cs.MA
Original source