Jan Corazza, Ivan Gavran, Gabriela Moreira, Daniel Neider
When blockchain systems are said to be trustless, what this really means is that all the trust is put into software. Thus, there are strong incentives to ensure blockchain software is correct -- vulnerabilities here cost millions and break businesses. One of the most powerful ways of establishing software correctness is by using formal methods. Approaches based on formal methods, however, induce a significant overhead in terms of time and expertise required to successfully employ them. Our work addresses this critical disadvantage by automating the creation of a formal model -- a mathematical abstraction of the software system -- which is often a core task when employing formal methods. We perform model synthesis in three phases: we first transpile the code into model stubs; then we "fill in the blanks" using a large language model (LLM); finally, we iteratively repair the generated model, on both syntactical and semantical level. In this way, we significantly reduce the amount of time necessary to create formal models and increase accessibility of valuable software verification methods that rely on them. The practical context of our work was reducing the time-to-value of using formal models for correctness audits of smart contracts.
A Frino, Robert Gaudiosi, Robert I. Webb, Z. Ivy Zhou
ABSTRACT This study clarifies discrepancies in previous research on the contribution of regulated Bitcoin futures to price discovery, where conclusions have varied between futures leading over spot markets or vice versa. We identify potential reasons behind these conflicting findings, including the choice of price discovery measures, sampling frequencies, modeling windows, futures contracts, and spot exchanges. Using 1‐s sampling frequencies to accurately capture price discovery in the fast‐paced markets and accounting for substantial noise differences between spot and futures markets, we find that the futures market generally leads spot markets, though this price leadership exhibits daily fluctuations. Moreover, we observe a pronounced increase in the futures market's contribution to price discovery around macroeconomic surprises and Tether stablecoin minting tweets.
Nabeel Mahdi Althabhawi, Ra’ed Fawzi Aburoub, Mohamad Rizal Abd Rahman, Faris Kamil Hasan Mihna · 5 authors
While smart contracts enhance efficiency and transparency, they raise legal and technical issues. Smart contracts do not involve face-to-face negotiation or discussion, which contributes to difficulty in confirming that both parties agreed to the terms. Moreover, while smart contracts that encode the intention of the parties show up on the blockchain as digital signatures or as preprogrammed actions, this begs the question as to precisely whether this reflects their intention and mutual consent in the first place. Furthermore, the execution of offer and acceptance in an automated manner poses a challenge to the traditional principles of contract law, as it may rely on adhesion contracts that limit the opportunities for negotiation. Moreover, the verification of legal capacity of the parties identified under a pseudonym is another challenge in a decentralized blockchain environment, especially for cross-border transactions that set varying legal standards. Through a mixed-methods approach of thematic analysis of interviews and literature review, the research responds to these challenges, across practical and theoretical domains. Proposed solutions include biometric identification, digital identity schemes, and AI-assisted consent verification. The study recommends aligning traditional legal principles with technological advancements and fostering international collaboration to create robust frameworks, ensuring fairness and enforceability in smart contracts. This study concludes that a twin-track approach—combining technological improvements with regulatory adjustments—is critical for ensuring the fairness, enforceability, and reliability of smart contracts.
To explore the legal and philosophical implications of smart contracts, with a focus on their enforceability and the political significance of the “code as law” paradigm. This study adopts a narrative review approach using a descriptive analytical method to examine the intersection of law, technology, and political theory. Sources were selected from academic databases published between 2020 and 2024, encompassing legal scholarship, computer science literature, and political philosophy. Thematic analysis was used to synthesize key ideas related to legal enforceability, algorithmic governance, and the transformation of legal subjectivity in coded systems. The review highlights significant tensions between traditional legal norms and the deterministic nature of smart contracts. While smart contracts offer advantages in terms of automation and efficiency, they also lack the capacity to address ambiguity, context, and moral judgment. These contracts challenge core principles of legal theory, including consent, due process, and equitable remedies. Jurisdictions differ in their responses, ranging from proactive legal recognition to cautious regulatory experimentation. Hybrid models of enforcement and reliance on oracles demonstrate emerging attempts to bridge the gap between code and law. Smart contracts represent a disruptive force in the legal domain, necessitating critical reflection on the philosophical and institutional foundations of modern legal systems. Their adoption must be guided by a commitment to justice, democratic governance, and interdisciplinary oversight to ensure that legal innovation aligns with human values and ethical responsibility.
Abstract This chapter examines decentralized autonomous organizations (DAOs) through two theoretical lenses: the theory of the firm and Elinor Ostrom’s institutional analysis framework. It argues that DAOs’ diverse organizational structures preclude broad generalizations about their economic and institutional nature. Some DAOs implement hierarchical arrangements characteristic of firms, others adopt different organizational models. The use of smart contracts does not definitively determine whether DAOs should be classified as contractual, firm-like, or as hybrid arrangements. The chapter critically examines the concepts of autonomy and decentralization in DAOs, revealing them as aspirational rather than fully realized characteristics. This analysis contributes to the legal scholarly discourse by providing a nuanced understanding of DAOs’ organizational nature and challenging simplistic categorizations of these emerging entities. It also assists practitioners in analyzing and developing the structure of particular DAOs.
Reentrancy vulnerabilities in Ethereum smart contracts have caused significant financial losses, prompting the creation of several automated reentrancy detectors.However, these detectors frequently yield a high rate of false positives due to coarse detection rules, often misclassifying contracts protected by anti-reentrancy patterns as vulnerable.Thus, there is a critical need for the development of specialized automated tools to assist these detectors in accurately identifying anti-reentrancy patterns.While existing code analysis techniques show promise for this specific task, they still face significant challenges in recognizing anti-reentrancy patterns.These challenges are primarily due to the complex and varied features of anti-reentrancy patterns, compounded by insufficient prior knowledge about these features.This paper introduces AutoAR, an automated recognition system designed to explore and identify prevalent anti-reentrancy patterns in Ethereum contracts.AutoAR utilizes a specialized graph representation, RentPDG, combined with a data filtration approach, to effectively capture anti-reentrancy-related semantics from a large pool of contracts.Based on RentPDGs extracted from these contracts, AutoAR employs a recognition model that integrates a graph auto-encoder with a clustering technique, specifically tailored for precise anti-reentrancy pattern identification.Experimental results show AutoAR can assist existing detectors in identifying 12 prevalent anti-reentrancy patterns with 89% accuracy, and when integrated into the detection workflow, it significantly reduces false positives by over 85%.* The corresponding authors.a reentrancy vulnerability in Ethereum, leading to substantial financial losses.
We compare the total capital efficiency of secure restaking and Proof-of-Stake (PoS) protocols. First, we consider the sufficient condition for the restaking graph to be secure. The condition implies that it is always possible to transform such a restaking graph into separate secure PoS protocols. Next, we derive two main results: upper and lower bounds on the required extra stakes to add to the validators of the secure restaking graph to be able to transform it into secure PoS protocols. In particular, we show that the restaking savings compared to PoS protocols can be very large and can asymptotically grow as a square root of the number of validators. We also study a complementary question of aggregating secure PoS protocols into a secure restaking graph and provide matching lower and upper bounds on the PoS savings.
The object of this study is the analysis of standards of proof, which are theoretical statements aimed at establishing the degree of confirmation that a factual hypothesis must reach to be considered sufficiently proven in judicial proceedings. The standards of evidence serve three essential functions: i) to establish indispensable criteria for the justification of evidentiary decisions regarding the sufficiency of the evidence produced; ii) to serve as a guarantee for the parties by providing predictability concerning the adequacy of the evidence they need to present; and iii) primarily to promote the allocation of the risks of error between the parties, depending on the socio-political interests at stake. Common law legal systems have long utilized such models to assess evidentiary sufficiency for rational decision-making on factual matters. Although reconciling legal institutions originating from common law with the legal system of civil law tradition countries, such as Brazil, is challenging, this study seeks to demonstrate that the principles supporting the use of standards of proof in foreign legal contexts are equally applicable to the Brazilian legal framework. The methodology adopted is qualitative, based on doctrinal and jurisprudential analysis. To this end, the research includes a review of works by both national and foreign authors, as well as landmark judicial decisions on the subject. Furthermore, a comparative method will be utilized to examine the application of standards of proof in the Brazilian and U.S. legal systems, highlighting their influences and possible adaptations
Marcos César de Souza Lima, Patrick Augusto Belitardo de Carvalho, Rodrigo Pires
O presente artigo tem como objetivo a análise do sistema de responsabilidade civil pertinente aos smart contracts. As novas modalidades de contratações assumem enorme relevância na sociedade da informação e do consumo, sendo fundamental uma tutela específica voltada à proteção do consumidor, vulnerável no mercado de consumo. O sistema desenvolvido pela Código de Defesa do Consumidor não foi pensado para contemplar os sofisticados contratos inteligentes, aliás, não há qualquer regra no ordenamento pátrio destinada a esta nova modalidade de contratação. Pretendeu-se, assim, investigar a dinâmica da responsabilidade civil nos smart contracts a partir do arcabouço elaborado para proteção do consumidor, a partir de um tensionamento entre a doutrina e legislação.
In the fast-evolving domain of blockchain technology, smart contracts have become instrumental, facilitating billions of dollars in transactions daily. However, the increasing prevalence of smart contract vulnerabilities poses significant risks, potentially undermining trust in this innovative technology. To address these security challenges, our research introduces a novel approach for detecting and mitigating vulnerabilities through a comprehensive analysis of four principal modalities: Solidity source code, bytecode, opcode, and intermediate representations. This multimodal analysis employs a Transformer architecture, VulnFusion, which uniquely integrates these modalities to provide a deeper understanding of both the semantic and syntactical nuances of smart contracts. We propose an interleaving-based data fusion technique that outperforms traditional fusion methods such as concatenation and cross-attention. Experimental evaluations demonstrate that our interleavingbased fusion technique achieves an impressive average F1 score of 89% across source code, opcode, and intermediate representations, demonstrating the effectiveness of our approach.
Digital platforms dominate our economy Without a doubt, platform business models have revolutionized almost every industry, from e-commerce (Amazon) and operating systems (iOS and Android) to transportation (Uber), film (Netflix) and hospitality (Airbnb).In 2023, four out of the five most valuable companies worldwide operated based on platform business models.Often, these platform business models have made services more accessible and significantly reduced costs for their users.Platform business models enable the platform provider, as the intermediary, to make these improvements at low costs for their users as network effects lock in users and allow the provider to collect and monetize their data.This mechanism often leads to one strong player dominating the market, allowing them to monetize their monopoly-like position.The recent upsurge in artificial intelligence (AI) has fostered fears that these platform businesses might become even more powerful.More than ever, critics are concerned that current regulations fail to mitigate these dynamics, as antitrust regulations have failed to prevent platform providers from acquiring even more market power.Regulators are often fighting an uphill battle as the platform businesses can often rely on much deeper pockets and smart lawyers who find new ways to play down their employers' real power.
Smart contracts have been widely used for their capability of giving blockchain a user-defined logic. In recent years, several smart contract security incidents have resulted in enormous financial losses. Therefore, it is important to detect vulnerabilities in smart contracts before deployment. Machine learning has been used recently in smart contract vulnerability detection. Unfortunately, due to the loss of information during feature extraction, the detection results are unsatisfactory. Hence, we propose a novel approach called ContractGNN, which combines a new concept of avulnerability sub-graph(VSG) withgraph neural networks(GNNs). Compared with traditional methods, checking a VSG is more accurate because the VSG removes irrelevant vertexes in the control flow graph. Furthermore, a VSG can be aggregated and simplified, thus improving the efficiency of message passing in a GNN. Based on aggregated VSGs, we design a new feature extraction method that preserves semantic information, the order of opcode, and control flows of smart contracts. Moreover, we compare a large number of GNN classification models and select the best one to implement ContractGNN. We then test ContractGNN on 48,493 real-world smart contracts, and the experimental results show that ContractGNN outperforms other smart contract vulnerability detection tools, with an average F1 score of 89.70%.
We present a dispute resolution protocol that can be built on the Ethereum blockchain. Unlike existing applications, it is private by design through the use of zero-knowledge proofs. The protocol is resilient to Sybil attacks and provides increased collusion resistance amongst participating parties. A resolution to the dispute is guaranteed, whilst ensuring the users have the final say on the chosen resolution. The proposed protocol rewards stakeholders through a social incentive mechanism leveraging Soulbound tokens, and rewards agents who behave honestly, as opposed to favouring the wealthy. To our knowledge, this is one of the first dispute resolution protocols to implement governance through reputation as opposed to token-based voting. Furthermore, it is fully viable, given that all its necessary components are currently operating on the Ethereum blockchain.
O trabalho objetiva analisar a figura dos smart contracts na perspectiva do princípio da obrigatoriedade dos contratos, de maneira que possa ser determinada uma potencial ressignificação do “pacta sunt servanda” diante deles. Assim, busca conceituar e categorizar a blockchain e os contratos inteligentes para um exame de seus efeitos diante do Direito e o modelo do contrato tradicional. Por conseguinte, é realizada uma breve contextualização histórica da força obrigatória dos contratos, apontando suas concepções na história, analisando-o no contexto do meio digital. Considerando-se essa análise, são sistematizadas suas aplicabilidades em nível global e, posteriormente, na realidade brasileira – de modo a apresentar as possíveis vantagens e desvantagens do instituto. Adota-se na pesquisa a metodologia referencial bibliográfica, utilizando artigos, livros e obras que se reportam ao tema, assim como a legislação brasileira. Diante da pesquisa, conclui-se que o smart contract é uma opção com capacidade de reduzir os custos de transação e alguns riscos inerentes às operações. No entanto, devido às limitações da lógica de programação, seria uma opção viável para contratos mais simples e nichos específicos. Ademais, pode ser vantajoso aos entes públicos, no âmbito de sua própria rede Blockchain e, ainda, em face à possível utilização da moeda digital.
The Preamble of the Spanish Financial Transactions Tax Law establishes that “[t]he shaping of the tax follows the line taken by our neighbouring countries, including France and Italy, thus contributing to greater coordination of these taxes across Europe.” In this sense, the Spanish tax shows important similarities with those established in France and Italy in relation to the levy on the acquisition of certain shares and securities representing the capital of a company for consideration. Nevertheless, both the French and the Italian taxes apply to other types of transactions, not covered by the Spanish Law, which is why it is necessary to carry out the corresponding comparative study. Furthermore, the effects that have arisen from the application of this kind of taxes to financial transactions merited a proper analysis in order to determine if the main goals pursued by these taxes have been achieved in an efficient way. In any case, there are emerging tax challenges in financial markets connected, on the one hand, to the use of crypto-assets and distributed ledger technology, and, on the other hand, to the implementation of artificial intelligence and machine learning and the fair taxation of these operations. In this sense, the Spanish tax presents important similarities with those established in France and Italy in relation to the levy of acquisition for consideration of certain shares and securities representing the capital of a company. Nevertheless, both the French and the Italian taxes subject other types of transactions, out of scope of the Spanish Law, which is why it is necessary to carry out the corresponding comparative study. Furthermore, the effects that have arisen from the application of this kind of taxes on financial transactions merited a proper analysis in order to determine if the main goals persuaded by theses taxes have been achieved in an efficient way. In any case, there are emerging tax challenges in financial markets connected, by the one hand, to the use of crypto-assets and distributed ledger technology; by the other one, to the implementation of artificial intelligence and machine-learning and the fair taxation of these operations.
Zhiyang Chen, Ye Liu, Sidi Mohamed Beillahi, Yi Li · 5 authors
Smart contracts, self-executing programs on the blockchain, facilitate reliable value exchanges without centralized oversight. Despite the recent focus on dynamic analysis of their transaction histories in both industry and academia, no open-source tool currently offers comprehensive tracking of complete transaction information to extract user-desired data such as invariant-related data. This paper introduces OpenTracer, designed to address this gap. OpenTracer guarantees comprehensive tracking of every execution step, providing complete transaction information. OpenTracer has been employed to analyze 350,800 Ethereum transactions, successfully inferring 23 different types of invariant from predefined templates. The tool is fully open-sourced, serving as a valuable resource for developers and researchers aiming to extract or validate new invariants from transaction traces. A demonstration video of OpenTracer is available at https://youtu.be/vTdmjWdYd30. The source code of OpenTracer is available at https://github.com/jeffchen006/OpenTracer.
Abstract Contract automation is a challenging topic within Artificial Intelligence and LegalTech. From digitised contracts via smart contracts, we are heading towards Intelligent Contracts ( iContracts ). We will address the main challenge of iContracts: the handling of communications and risk data in contract automation. Our Research Question reads: to what extent is it possible to develop an ontology that automates contracts with communications and risk data? The article designs and conceptualises an iContract ontology. Our findings validate the conceptual expressiveness of our ontology. A brief discussion highlights the value of the ontology design and its application domains. From the results, we may conclude that the current method is innovative and that further research is necessary for handling more complex use cases.
NatSpec comments play an essential role in smart contracts. Their clear and informative format helps users gain an accurate understanding of smart contract functions and diminish financial risk. However, widespread non-adherence to NatSpec standards currently causes confusion for both end-users and developers. Current research often neglects the importance of NatSpec formats or solely emphasizes user-centric comments in smart contract generation. This oversight can hinder contract trustworthiness, code reusability, maintenance efficiency, and ultimately, the development of the community ecosystem. To bridge this gap, this paper presents the first empirical study on 253 verified contracts encompassing 16,620 functions from Etherscan, uncovering that 87 % of the smart contract functions have Comment Errors (CE) and pinpointing prevalent deviation patterns. Based on our findings, we propose CETerminator, an automated approach for detecting and rectifying CE in smart contract functions. Due to the scarcity of NatSpec-compliant comments for collected smart contract functions, CETerminator employs in-context learning on a large language model to generate NatSpec comments. The approach then compares the original and the generated comments, utilizing corpus-driven heuristic rules to identify and correct diverse error categories in the original comments. In our evaluation, CETerminator demonstrates a high token overlap rate for addressing missing comments. In addition, the average precision, recall, and F1-scores for handling inconsistency comments are 85.28 %, 86.48 %, and 85.85%, respectively, outperforming the baseline by 39.79%, 39.53%, and 39.84%.
Noor Fatini Izzati Fadzil, Saheed Abdullahi Busari
Non-fungible tokens (NFT) are considered unique digital assets recorded on the blockchain whose ownership and authenticity cannot be duplicated, exchanged, or divided but can be transferred by the owner, allowing the selling and trading of NFT through the blockchain. This study addresses the issues relating to the extent of NFT compliance with Islamic law. It sheds light on the concept of symbols that are not replaceable and presents the opinions of contemporary jurists in dealings with NFT based on a juristic adaptation of these transactions.The study is qualitatively based and using an inductive approach to collect library information and analytical approach to clarify the issue and present the opinions of the jurists. The study found that investing in non-fungible tokens is legally permissible, but the principles of Shariah must be adhered to when dealing with them because they are among the things that were not prevented except by legal evidence. NFTs should be items of legal value that benefit people, and are free from illegal activities such as usury, fraud, and gambling. The study recommends an urgent need for Shariah scholars and technology experts to create an NFT platform that is compatible with Islamic Shariah, and allowing Muslims to participate in it.