Shared code in blockchains, known as smart contracts , stands to replace important parts of our digital governance and financial infrastructure. The permissionless execution of smart contracts is tightly coupled to cryptocurrencies and Proof-of-Work blockchains. As a result, smart contracts inherit the environmental impact of Proof-of-Work blockchains, such as its energy consumption, carbon footprint, and electronic waste. The four concepts of relaxed consistency, strong identities, probabilistic consensus, and the use of liabilities instead of assets may change the status quo. This work explores the integration of these concepts to decouple smart contracts from Proof-of-Work blockchains. By means of a local-first approach, which may expose users to inconsistent ephemeral contract states, the architecture of smart contracts can be transformed to become green. Because such contract states may be dropped, we base the interactions between users on liabilities. We propose a novel paradigm for smart contract architectures, named Green Smart Contracts, that is based on a local-first approach. Furthermore, we present and implement a prototype solution for this paradigm. We validate the need for a mechanism to resolve consistency violations by replaying the contract calls of a real smart contract. Our simulation shows that violations occur more often (13% of contract invocations) when using liabilities than when using a traditional blockchain (3% of contract invocations). However, we additionally validate that they can be avoided using a consensus mechanism, and our experiments show that a publish-subscribe messaging pattern uses the fewest messages to do so, though it may not be applicable for use cases that disallow the inherent imbalance in the messaging between peers. Our carbon emission estimation shows that a Green Smart Contract approach lowers carbon emissions by 52.31% when compared with the messaging behavior of a typical peer-to-peer blockchain with 1000 nodes.
In this dissertation, we address the problem of vagueness in traditional legal contracts by presenting novel methodologies that aid in the paradigm shift from traditional legal contracts to smart contracts. We discuss key enabling technologies that assist in converting the traditional natural language legal contract, which is full of vague words, phrases, and sentences to the blockchain-based precise smart contract, including metrics evaluation during our conversion experiment. To address the challenge of this contract-transformation process, we propose four novel proof-of-concept approaches that take vagueness and different possible interpretations into significant consideration, where we experiment with popular vendors' existing vague legal contracts. We show through experiments that our proposed methodologies are able to study the degree of vagueness in every interpretation and demonstrate which vendor's translated-smart contract can be more accurate, optimized, and have a lesser degree of vagueness. We also incorporated the method of fuzzy logic inside the blockchain-based smart contract, to successfully model the semantics of linguistic expressions. Our experiments and results show that the smart contract with the higher degrees of truth can be very complex technically but more accurate at the same time. By using fuzzy logic inside a smart contract, it becomes easier to solve the problem of contractual ambiguities as well as expedite the process of claiming compensation when implemented in a blockchain-based smart contract.
Public entities trying to raise funds are typically faced with, at best, two options: a public-private partnership or issuing municipal bonds. The former leaves the investee susceptible to value extraction or rent-seeking. The latter requires working through networks of intermediaries and the extensive infrastructure to support a municipal bond market. Moreover, current initial coin offering based blockchain fund raising methods do little to address the most significant issues with modern-day fundraising while adding complexity and risk. In this paper, we present a novel blockchain-based solution using a fractionally fiat-backed reserve currency using distributed ledger technology to increase transparency and democratization of investment while lowering fundraising costs. Our solution is an automated value engine letting investors hold a currency representative of their investment. At the same time, its supply is automatically burned or minted to algorithmically manage the ratio between funds raised and return on investment. When applied to a real-life bond issuance case, results show that our solution raises the required funds, provides a 0.25% higher return on investment, and yields an estimated reduction in direct costs of up to 58.48 % through eliminating intermediary overhead.
Centralized cryptocurrency exchanges offer users a more convenient platform to trade their digital assets at the cost of reduced control. As a result, when these exchanges suffer interruptions users struggle to access their funds or modify their orders. We investigate 41 events at the popular exchange Bitfinex, and measure the impact these events have on trades, volume, and pricing. We find that the volume to trade ratio increases during events, as fewer traders are moving large amounts of bitcoin. We also find that these interruptions often occur at the same time as arbitrage opportunities, with substantial profit opportunities.
Nowadays, the utilization of online auction platforms is becoming increasingly prevalent.Online auction provides a common and practical way for global buyers to compete fairly.Nevertheless, the anonymous environment may bring collusion among entities with effects on results.Compared with traditional mechanisms which rely on third-party platforms, the data auction based on smart contract can create a decentralized environment to avoid the occurrence of collusion.Meanwhile, there exists few research on the verification of its reliability and safety which is worth investigating from the perspective of formal methods.In this paper, we apply Process Algebra CSP in modeling the data auction communicating system among five key entities.In addition, we use Process Analysis Toolkit (PAT) to realize the mechanism and verify five crucial properties, including deadlock freedom, data reachability, data correctness, anti-collusion capability and data security.The verification results indicate that the architecture of data auction based on smart contract can satisfy all the above requirements.Especially, the design of asymmetric encryption for the fundamental information ensures the non-occurrence of collusion in the auction.Additionally, the digital signature generated by private key attached to the message guarantees the safety of the interaction.
In a typical decentralized autonomous organization (DAO), people organize themselves into a group that is programmatically managed. DAOs can act as bidders in auctions, with a DAO's bid treated by the auctioneer as if it had been submitted by an individual, without regard to the internal structure of the DAO. We study auctions in which the bidders are DAOs. More precisely, we consider the design of two-level auctions in which the "participants" are groups of bidders rather than individuals. Bidders form DAOs to pool resources, but must then also negotiate the terms by which the DAO's winnings are shared. We model the outcome of a DAO's negotiations by an aggregation function (which aggregates DAO members' bids into a single group bid), and a budget-balanced cost-sharing mechanism (that determines DAO members' access to the DAO's allocation and distributes the total payment demanded from the DAO to its members). We pursue two-level mechanisms that are incentive-compatible (with truthful bidding a dominant strategy for members of each DAO) and approximately welfare-optimal. We prove that, even in the case of a single-item auction, incentive-compatible welfare maximization is not possible: No matter what the outer mechanism and the cost-sharing mechanisms used by DAOs, the welfare of the resulting two-level mechanism can be a $\approx \ln n$ factor less than optimal. We complement this lower bound with a natural two-level mechanism that achieves a matching approximate welfare guarantee. Our upper bound also extends to multi-item auctions where individuals have additive valuations. Finally, we show that our positive results cannot be extended much further: Even in multi-item settings with unit-demand bidders, truthful two-level mechanisms form a highly restricted class and as a consequence cannot guarantee any non-trivial approximation of the maximum social welfare.
In this paper, we present subgraphs of Ethereum wallets involved in NFT trades of the top 15 ERC721 NFT collections. To obtain the subgraphs, we have extracted the Ethereum transaction graph from a live Ethereum node and filtered out exchanges, mining pools, and smart contracts. For each of the selected collections, we identified the set of accounts involved in NFT trading, which we used to perform a breadth-first search in the Ethereum transaction graph to obtain a subgraph. These subgraphs can offer insight into the linkability of accounts participating in NFT trading on the Ethereum blockchain.
Amir M. Ebrahimi, Gustavo A. Oliva, Ahmed E. Hassan
Programmable blockchain platforms such as Ethereum offer unique benefits to application development, including a decentralized infrastructure, tamper-proof transactions, and auditability. These benefits enable new types of applications that can bring competitive advantage to several business segments. Nonetheless, the pressure of time-to-market combined with relatively immature development technologies (e.g., the Solidity programming language), lack of high-quality training resources, and an unclear roadmap for Ethereum creates a context that favors the introduction of technical debt (e.g., code hacks, workarounds, and suboptimal implementations) into application code. In this paper, we study self-admitted technical debt (SATD) in smart contracts. SATD refers to technical debt that is explicitly acknowledged in the source code by developers via code comments. We extract 726 k real-world contracts from Ethereum and apply both quantitative and qualitative methods in order to (i) determine SATD prevalence, (ii) understand the relationship between code cloning and SATD prevalence, and (iii) uncover the different categories of SATD. Our findings reveal that, while SATD is not a widespread phenomenon (1.5% of real-world contracts contain SATD), SATD does occur in extremely relevant contracts (e.g., multi-million contracts). We also observed a strong connection between SATD prevalence and code cloning activities, leading us to conclude that the former cannot be reliably studied without taking the latter into consideration. Finally, we produced a taxonomy for SATD that consists of 6 major and 26 minor categories. We note that several minor categories are bound to the domain of blockchain and smart contracts, including gas-inefficient implementations and Solidity-induced workarounds. Based on our results, we derive a set of practical recommendations for contract developers and introduce open research questions to guide future research on the topic.
Gongfan Chen, Chuanni He, Simon M. Hsiang, Min Liu · 5 authors
Central project managers devote massive efforts to monitor, track, coordinate, and take actions to diagnose and prognose governed constraints and remove them to enable a reliable workflow.The blockchain-enabled smart contract can streamline the work process by predefining "intelligent" consensus to facilitate central managers' jobs.However, the inability of smart contracts to handle unexpected events under complicated environments posited challenges in realizing it automatically.This study aimed to develop adaptive mechanism to mediate production bottlenecks caused by constraints.First, the research identified the four main types of constraints and their levels of variability from a prefabricated project.Then, a simulation model was established to quantify the impacts of different constraints and determine the fair payment rules.Lastly, different constraint-bundled scenarios and execution policies were developed and encoded in the smart contracts for automated executions.Smart contracts can assist construction managers to motivate reliable production and minimize waste caused by bottlenecks in the system.
Abstract Tackling major societal challenges often requires a significant level of organizational novelty. One such recent example is Klima DAO, a decentralized autonomous organization (DAO) that seeks to transform voluntary markets through the adoption of carbon credits. DAOs rely on self-executing rules and have a high level of decentralization. By leveraging blockchain and related technologies, Klima DAO offers innovative solutions to universal problems of organizing in both its governance and product delivery. Blockchain tools enable Klima DAO to operate uniquely, allowing for rapid scaling while maintaining decentralized governance and promoting transparent carbon credit trading with low transaction fees. As such, Klima DAO may serve as a model for future organizations in search of greater transparency and flatter governance structures.
Despite the increase in the number of blockchain-based Decentralized Autonomous Organizations (DAOs), there is no consensus on what constitutes a DAO. This paper provides an in-depth study of DAOs by analyzing their definitions, characteristics, and emerging developments. Existing definitions in the literature hardly recognize common functionalities and intermingle coded DAOs, DAO deployment platforms, and blockchain DAOs. We developed a comprehensive DAO definition by reviewing the literature and empirically analyzing 1,859 DAOs. The findings show that many DAOs were inactive and that a threshold of 20 tokenholders is a tipping point for DAOs to survive over time and maintain sustained levels of activity. Finally, based on an empirical analysis of 9,845 perceived DAOs, we identified the emerging development of off-chain voting. This emerging development challenges the autonomous nature of DAOs. We recommend further research to investigate the effect of governance structures on their long-term sustainability and viability for both on-chain and off-chain DAOs.
Yackolley Amoussou-Guenou, Bruno Biais, Maria Potop-Butucaru, Sara Tucci-Piergiovanni
Abstract We study consensus in a protocol capturing in a simplified manner the major features of the majority of Proof of Stake blockchains. A committee is formed; one member proposes a block; and the others can check its validity and vote for it. Blocks with a majority of votes are produced. When an invalid block is produced, the stakes of the members who voted for it are “slashed.” Profit-maximizing members interact with adversaries seeking to disrupt consensus. When slashing is limited, free-riding and moral-hazard lead to invalid blocks in equilibrium. We propose a protocol modification producing only valid blocks in equilibrium. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
Lioba Heimbach, Eric Schertenleib, Roger Wattenhofer
The transaction ordering dependency of the smart contracts building decentralized exchanges (DEXes) allow for predatory trading strategies. In particular, front-running attacks present a constant risk for traders on DEXes. Whereas legal regulation outlaws most front-running practices in traditional finance, such measures are ineffective in preventing front-running on DEXes. While novel market designs hindering front-running may emerge, it remains unclear whether the market's participants, in particular, liquidity providers, would be willing to adopt these new designs. A misalignment of the participant's private incentives and the market's social incentives can hinder the market from adopting an effective prevention mechanism. We present a game-theoretic model to study the behavior of sophisticated traders, retail traders, and liquidity providers in DEXes. Sophisticated traders adjust for front-running attacks, while retail traders do not, likely due to lack of knowledge or irrationality. Our findings show that with less than 1% of order flow from retail traders, traders' and liquidity providers' interests align with the market's social incentives - eliminating front-running attacks. However, the benefit from embracing this novel market is often small and may not suffice to entice them. With retail traders making up a larger proportion (around 10%) of the order flow, liquidity providers tend to stay in pools that do not protect against front-running. This suggests both educating traders and providing additional incentives for liquidity providers are necessary for market self-regulation.
Yixuan Fan, Lei Zhang, Ruiyu Wang, Muhammad Ali Imran
Driven by the development of blockchain infrastructures and the promotion of Web 3, more than 4000 Decentralized Autonomous Organizations (DAOs) have been developed as online organizations jointly owned and managed by their members who work for the same interests. Voting mechanisms as the democratic administration of DAOs without the involvement of central authority, are crucial to both the development of the DAO community and the protection of individual interests. This paper is one of the first analyses of the critical role of voting mechanisms in DAOs' operation. In the absence of systematic studies of voting mechanisms in DAOs, we propose five tiers of decentralization in DAO voting which marks the critical difference between DAO voting and conventional voting. We also define four dimensions to comprehensively evaluate the performance of DAO voting mechanisms, which identify the demands and characteristics of DAO voting and put forward clear design guidelines for voting mechanisms in DAOs. Finally, we take seven typical voting mechanisms as examples and analyze their performance in our proposed evaluation schemes.
Petra Hozzová, Jaroslav Bendík, Alexander Nutz, Yoav Rodeh
The need to solve non-linear arithmetic constraints presents a major obstacle to the automatic verification of smart contracts. In this case study we focus on the two overapproximation techniques used by the industry verification tool Certora Prover: overapproximation of non-linear integer arithmetic using linear integer arithmetic and using non-linear real arithmetic. We compare the performance of contemporary SMT solvers on verification conditions produced by the Certora Prover using these two approximations against the natural non-linear integer arithmetic encoding. Our evaluation shows that the use of the overapproximation methods leads to solving a significant number of new problems.
Programmable smart contracts facilitate the application of blockchain to many areas of industry, e.g., supply chains, energy, and healthcare. The off-chain execution model for blockchain smart contracts is a promising approach to achieve scalability for industrial applications, which executes each smart contract in one of the small-scale consensus groups. However, previous work based on such a model cannot efficiently handle cross-group contract transactions that involve multiple cross-group invocations between smart contracts because of the heavyweight state synchronization and repeated executions. In this article, we propose interactive consensus-based off-chain execution (ICOE), a lightweight group-consensus-based off-chain execution model, for cross-group contract transactions without the need of state synchronization and duplicate executions and also prove its correctness. The key novelty of ourICOEis to let the invoked smart contract only executed in its residing group and only return the execution result to the invoking smart contract while leveraging the two-phase commit protocol to guarantee consistent commits across multiple groups within the same invoking smart contract transaction. We implementICOEand the extensive experimental results show that ourICOEachieves a 14× improvement of throughput on average compared with the state-of-the-art model.
Asset digitization is an important part of digital society. However, there are many problems in existing centralized asset trading platforms, for example, the platform has the dominant power in the transaction process and holds a large amount of user data, which is detrimental to users’ interests. To solve these problems, we propose a distributed asset trading mechanism based on automated negotiation. Firstly, we propose a distributed asset trading framework based on the consortium blockchain, which provides trust guarantees for trading through the access control of the consortium blockchain, represents the ownership of assets through non-fungible tokens (NFT), and reduces the blockchain burden by moving the negotiation process off the blockchain through the state channel technology. Then, to reduce the negotiation cost and improve the negotiation results, we propose a bilateral automated multi-issue negotiation model for asset trading. The experimental results show that the negotiation model performs well in terms of success rate and negotiation time, and can achieve win-win agreements.
Smart contracts, which automatically execute on decentralized platforms like Ethereum, require high security and low gas consumption. As a result, developers have a strong demand for semantic code search tools that utilize natural language queries to efficiently search for existing code snippets. However, existing code search models face a semantic gap between code and queries, which requires a large amount of training data. In this paper, we propose a fine-tuning approach to bridge the semantic gap in code search and improve the search accuracy. We collect 80 723 different pairs of <comment, code snippet> from Etherscan.io and use these pairs to fine-tune, validate, and test the pre-trained CodeBERT model. Using the fine-tuned model, we develop a code search engine specifically for smart contracts. We evaluate the Recall@ k and Mean Reciprocal Rank (MRR) of the fine-tuned CodeBERT model using different proportions of the fine-tuned data. It is encouraging that even a small amount of fine-tuned data can produce satisfactory results. In addition, we perform a comparative analysis between the fine-tuned CodeBERT model and the two state-of-the-art models. The experimental results show that the fine-tuned CodeBERT model has superior performance in terms of Recall@ k and MRR. These findings highlight the effectiveness of our fine-tuning approach and its potential to significantly improve the code search accuracy.
Congying Jin, Taotao Wang, Zhe Wang, Long Shi · 5 authors
In the block space market of the Ethereum blockchain, miners are the producers who can maximize their revenue—a value called Miner Extrac table Value (MEV)—by including, excluding, or reordering transactions in the blocks they produce. Some special users, arbitrage bots, are aware of MEV and may opt to exploit the existence of MEV to seize arbitrage opportunities in Decentralized Finance (DeFi) applications. These bots usually compete for block space with each other via a gas action process in which bots bid up their gas prices. Due to the lack of symmetric market information, bots blindly issue multiple transactions continuously aiming at the same arbitrage opportunity and they gradually increase the gas prices. Such malicious bidding behavior leads to the problems of transaction congestion and high gas fee in the Ethereum network. Based on the Flashbots project, we propose an Ethereum gas auction model using First Price Sealed-Bid Auction (FPSBA). In our model, the bidding bots no longer need to continue raising their gas bids in response to threats from other bots, and our derived optimal FPSBA bidding strategy under the dominant strategy equilibrium can effectively reduce the bots’ bids in gas action. Our simulation results illustrate that our FPSBA can achieve a lower average bidding price for the biding bots compared to the blind continuous bidding strategy dose in the original Ethereum network, thus it can keep the whole gas price level stable.
Blockchain has been recognised as a technological breakthrough with the ability to support new decentralised security-based solutions in sectors such as information technology and finance. Blockchain allows different communities to create Decentralised Autonomous Organisations (DAOs), which are self-organised democratic organisations controlled by smart contracts. This paper presents a new DAO model for the procurement of services by public organisations, such as government agencies. To demonstrate the advantages of this solution, this work looks specifically at current public procurement systems that resort to third-party contractors that manage these negotiations. Third parties lack the transparency, security, and democratic representation that a DAO can provide. We present the implementation of a DAO as a set of smart contracts executed on Ethereum-compatible permissionless blockchains, supported by a consensus algorithm, replacing third-party contractors.
Decentralized Autonomous Organizations (DAOs) are sovereign digital communities that are owned by their members and that are algorithmically-controlled, usually by encoding their rules of conduct as smart contracts. Even though such communities become more popular and influential, their governance capabilities are still limited and lacking in quality. We argue that the MAS community holds the keys to improving the governance capabilities of DAOs; and that the challenge of DAO governance constitutes an important, new application area for MAS research that has the potential to have both scientific and societal impacts. Concretely, we describe DAOs and their governance needs and highlight gaps between the state of the art of MAS research and the governance needs of DAOs.
Johnnatan Messias, Vabuk Pahari, B. Chandrasekaran, Krishna P. Gummadi · 5 authors
Smart contracts are contractual agreements between participants of a blockchain, who cannot implicitly trust one another. They are software programs that run on top of a blockchain, and we may need to change them from time to time (e.g., to fix bugs or address new use cases). Governance protocols define the means for amending or changing these smart contracts without any centralized authority. They distribute the decision-making power to every user of the smart contract: Users vote on accepting or rejecting every change. In this work, we review and characterize decentralized governance in practice, using Compound and Uniswap -- two widely used governance protocols -- as a case study. We reveal a high concentration of voting power in both Compound and Uniswap: 10 voters hold together 57.86% and 44.72% of the voting power, respectively. Although proposals to change or amend the protocol receive, on average, a substantial number of votes (i.e., 89.39%) in favor within the Compound protocol, they require fewer than three voters to obtain 50% or more votes. We show that voting on Compound proposals can be unfairly expensive for small token holders, and we discover voting coalitions that can further marginalize these users.
Blockchain technology has enabled decentralized applications and peer-to-peer networks to be sustained by an incentive system based on tokens. At the same time, reputation is a paramount component for any limited-trust or no-trust system. However, in many systems, e.g., proof-of-stake-based systems, tokens are a proxy for reputation, therefore there might be confusion between wealth and reputation. In this paper, we focus on the social layer of dApps and present a two-token system that allows a clear-cut separation between wealth and reputation and fits the case of DAOs where user contribution is essential to maintain and sustain the platform, such as social apps where users are asked to vote about newcomers’ acceptance or to moderate and filter the content proposed by others. The paper delves into the implementation of such tokenomics, describes how the standard ERC-20 token can be adjusted to become a trustworthy reputation meter, and how the model can be optimized to reduce transaction fees. The value of the proposed work lies in moving away from a wealth-affected reputation in favor of a contribution-based one. Using such a system, dApps can reward users more fairly.