Blockchain Papers

Cynthia Wang

No abstract is available for this record.

Ke Xu, Yu‐Lun Chen, Bo Liu, Jian Chen

Abstract Price discovery studies of a single asset traded in multiple markets have traditionally focused on assessing the relative price discovery contribution of each market. However, in this paper, we demonstrate that the overall price discovery across all markets can undergo changes even when the relative price discovery of each market remains constant. We propose that this overall change in price discovery can be effectively captured by the fractional parameter in the fractionally cointegrated vector autoregressive (FCVAR) model. In contrast, the widely used cointegrated vector autoregressive (CVAR) model fails to account for this dynamic in overall price discovery. Through a combination of simulation exercises and empirical applications, we show that the FCVAR approach outperforms the CVAR model not only in evaluating the relative price discovery contributions but also, more importantly, in providing a comprehensive measurement of overall price discovery.

Mukesh Thakur, Yki Kortesniemi, Dmitrij Lagutin

The growing demand for wireless communications drives the development of new networking technologies, but also makes efficient usage of the limited frequency spectrum increasingly important. Leasing unused spectrum on a short-term basis would help increase utilisation, but the complicated lease negotiations usually make it financially unviable. To address this, the whole leasing process including the negotiations needs to be streamlined. This paper proposes an automated spectrum marketplace for leasing that allows frequency bands to be put for anonymous auction between qualified (sub)leasers. The solution utilizes decentralized identifiers and verifiable credentials for the entities’ privacy and distributed ledgers for automation and auditing of contract agreements. The prototype implementation demonstrates that the solution significantly streamlines the spectrum leasing process compared to the existing solution.

Po-Chu Hsu, Atsuko Miyaji

An auction is commonly used to sell limited resources in modern society.M+ 1st-price auction sellsMidentical goods toBbidders. The topMwinners can buy the goods at theM+1st-price. Each bidder sends their bids secretly as a bit-slice bidding vector to a trusted manager. Bit-slice is commonly used to compare secret values without revealing them. However, the bit-slice bidding vector also limits the upper bound of a bid as the length of the bidding vector. A binary format bidding vector was proposed to increase the bid upper bound to an exponential scale. For example, given a bidding vector with length 32, a binary format bidding vector can increase the bid upper bound from 32 to 232. However, previous protocols that use binary format bidding vectors require a somewhat homomorphic encryption (SHE) and a trusted manager. To make sure no party except the bidder itself knows its bid, our protocol does not have any managers. Instead, each bidder interacts with the Smart Contract independently. We propose a zero-knowledge proof that allows our protocol only requires partially homomorphic encryption such as an ElGamal encryption. To our best knowledge, our protocol is the first secureM+ 1st-price auction protocol that can reach an exponential bid upper bound without a manager and SHE.

MohammadAmin Fazli, Ali Owfi, MohammadReza Taesiri

No abstract is available for this record.

Tivas Gupta, Mallesh M. Pai, Max Resnick

The current Proposer-Builder Separation (PBS) equilibrium has several builders with different backgrounds winning blocks consistently. This paper considers how that equilibrium will shift when transactions are sold privately via order flow auctions (OFAs) rather than forwarded directly to the public mempool. We discuss a novel model that highlights the augmented value of private order flow for integrated builder searchers. We show that private order flow is complementary to top-of-block opportunities, and therefore integrated builder-searchers are more likely to participate in OFAs and outbid non integrated builders. They will then parlay access to these private transactions into an advantage in the PBS auction, winning blocks more often and extracting higher profits than non-integrated builders. To validate our main assumptions, we construct a novel dataset pairing post-merge PBS outcomes with realized 12-second volatility on a leading CEX (Binance). Our results show that integrated builder-searchers are more likely to win in the PBS auction when realized volatility is high, suggesting that indeed such builders have an advantage in extracting top-of-block opportunities. Our findings suggest that modifying PBS to disentangle the intertwined dynamics between top-of-block extraction and private order flow would pave the way for a fairer and more decentralized Ethereum.

Haibao Wen, Shengmin Sun, Tao Huang, Dunhui Xiao

In the era of digital markets, the challenge for consumers is discerning quality amidst information asymmetry . While traditional markets use brand mechanisms to address this issue, transferring such systems to internet-based P2P markets – where misleading practices like fake ratings are rampant – remains challenging. Current internet platforms strive to counter this through verification algorithms, but these efforts find themselves in a continuous tug-of-war with counterfeit actions. Exploiting the transparency, immutability, and traceability of blockchain technology, this paper introduces a robust reputation voting system grounded in it. Unlike existing blockchain-based reputation systems, our model harnesses an intrinsically economically incentivized approach to bolster agent integrity. We optimize this model to mirror real-world user behavior , preserving the reputation system’s foundational sustainability . Through Monte-Carlo simulations, using both uniform and power-law distributions enabled by an innovative inverse transform method, we traverse a broad parameter landscape, replicating real-world complexity. The findings underscore the promise of a sustainable, transparent, and formidable reputation mechanism. Given its structure, our framework can potentially function as a universal, sustainable oracle for offchain-onchain bridging, aiding entities in perpetually cultivating their reputation. Future integration with technologies like Ring Signature and Zero Knowledge Proof could amplify the system’s privacy facets, rendering it particularly influential in the ever-evolving digital domain.

Shan Meng, Xia Zhao, Xi Zhao

Crowdsourcing task success depends on the contributions of developers. How to identify capable developers and motivate them to actively contribute to a task is a challenging issue. This study investigates how the use of cryptocurrency rewards, i.e., the choices of stablecoins and unstablecoins affects the crowdsourcing task success, and how the relationship depends on task difficulty. Based on 3858 crowdsourcing tasks, we find that the use of unstablecoins reduces the number of participating contributors and extends the time period of having the first contributor, but has no significant effect on the likelihood of task success. In addition, task difficulty alleviates the negative effect of the unstablecoins on the number of participants. Our study potentially provides important implications for the use of cryptocurrency tokens as task rewards.

Pavan Ramchandra Padghan, S. Arul Daniel, P. Raja

No abstract is available for this record.

Stefanie Boss, Imtiaz Sifat

No abstract is available for this record.

Josef Lubas, Johann Eder

No abstract is available for this record.

Thomas E. Portegys, James R. Wolf

This research proposes a novel method for ensuring fair governance of a common resource recorded on a blockchain. It features a self-governing system of stakeholders, managing resources by taking on the roles of auditors and claimants in place of having an overseeing bureaucracy with its accompanying overhead costs. While self-governing can be subject to fraud and collusion, in the proposed governance system, anonymity, a staple of blockchain transactions, is utilized to mitigate these negative effects. This is done by assigning random anonymous auditors to resource claimants. Cheating, along with improper auditing, will result in penalties for both auditor and claimant. Improper auditing consists not only of allowing unlawful resource use but also denying lawful use. The proposed system is a Decentralized Autonomous Organization (DAO) running on a Hyperledger Fabric blockchain. All activities are recorded as immutable public transactions on the blockchain. A simulation and a blockchain game to support the plausibility of the model are presented.

N. S. Cherkas, Anatoliy Batyuk

The advent of smart contract technology in blockchain networks has ushered in a new era of possibilities for implementing complex decentralized finance protocols. Over time, these protocols have gained significant traction, reaching a Total Value Locked (TVL) of over 150 billion US dollars. While blockchain networks offer inherent benefits such as immutability, transparency, decentralization, and security, they still grapple with a critical challenge – the inability to ensure a predictable order of transactions within produced blocks. This limitation has given rise to the Maximal Extractable Value (MEV) phenomenon. MEV represents the maximum potential benefit that certain network participants, primarily miners and validators, can extract by wielding their exclusive capability to influence transaction order. In this work, we embark on an exhaustive exploration of the MEV phenomenon and delve deep into its impact on the broader blockchain ecosystem. We shed light on the pressing issue of transaction ordering in blockchain networks and provide an in-depth survey of the vast body of scholarly publications focused on MEV extraction. This comprehensive review allowed us to conduct a retrospective analysis of the MEV phenomenon, categorize its most common manifestations, and uncover current development trends. Intriguingly, during this analysis, parallels were drawn with similar manipulations witnessed in the realm of high-frequency algorithmic trading within traditional financial markets. A vital conclusion that emerged from our study pertains to possible strategies for addressing the MEV problem within decentralized finance protocols. We systematically outline the current research directions concerning MEV, explore the methodologies and tools employed in these studies, and present concrete examples of MEV extraction within the Ethereum network, accompanied by quantitative estimations. In summary, the MEV phenomenon has cast an overwhelming negative impact on blockchain networks and decentralized finance. Our analysis of existing publications within a specific subcategory reveals the current absence of an effective solution to the MEV extraction problem. This underscores the importance of further research aimed at mitigating the adverse effects of MEV on blockchain networks and decentralized finance protocols.

David Aveiro, João Zambujal‐Oliveira

No abstract is available for this record.

Tommi Elo, Jarno Marttila, Sergi Cutillas, Esko Hakanen

No abstract is available for this record.

Sulyab Thottungal Valapu, Tamoghna Sarkar, Jared Coleman, Anusha Avyukt · 8 authors

We introduce DARSAN, a decentralized review system designed for Non-Fungible Token (NFT) marketplaces, to address the challenge of verifying the quality of highly resalable products with few verified buyers by incentivizing unbiased reviews. DARSAN works by iteratively selecting a group of reviewers (called ``experts'') who are likely to both accurately predict the objective popularity and assess some subjective quality of the assets uniquely associated with NFTs. The system consists of a two-phased review process: a ``pre-listing'' phase where only experts can review the product, and a ``pre-sale'' phase where any reviewer on the system can review the product. Upon completion of the sale, DARSAN distributes incentives to the participants and selects the next generation of experts based on the performance of both experts and non-expert reviewers. We evaluate DARSAN through simulation and show that, once bootstrapped with an initial set of appropriately chosen experts, DARSAN favors honest reviewers and improves the quality of the expert pool over time without any external intervention even in the presence of potentially malicious participants.

Dan Heilmann, Daniel Muschiol, Lars Karbach, Moritz Korte · 7 authors

No abstract is available for this record.

Giacomo Ibba, Marco Ortu, Roberto Tonelli, Giuseppe Destefanis

No abstract is available for this record.

Joshua S. Gans

No abstract is available for this record.

Octan Network, Hanoi, Vietnam., Scott K. Imig

Motivated by the need for a credibly neutral reputation mechanism on the blockchain, we study Pagerank and other properties of two Ethereum addresses, considering one address as trustworthy and the other as problematic. We show that an unmodified Pagerank algorithm does not distinguish these cases, while asserting that Pagerank is nonetheless an important starting point for such a mechanism. We give several directions for extending or modifying the mechanism to cover such cases.

Sebeom Oh

A nearly real-time, immutable blockchain audit trail is widely thought to deter market abuse, yet systematic evidence is scarce. Analyzing 7.4 million transactions from 561 NFT collections, which represent unique digital assets on public blockchains, I show that wash trading activity has a negligible impact on market outcomes. Rather than boosting the value of their own NFT collections, wash traders appear motivated by token reward programs offered by trading platforms. In contrast, purchases by apparent insiders predict positive returns for the associated collections. Transparent ledgers thus both neutralize obvious trade-based manipulation and give market participants enough information to detect insider activity.

Vitalik Buterin, Jacob Illum, Matthias Nadler, Fabian Schär · 5 authors

We study Privacy Pools, a novel smart contract-based privacy-enhancing protocol. The protocol introduces a mechanism for users to reveal certain properties of their transaction without having to reveal the transaction itself. The core concept involves allowing users to publish a zero-knowledge proof, demonstrating that their funds (do not) originate from known (un-)lawful sources, without publicly revealing their entire transaction history. This is achieved by proving membership in custom association sets, which are designed to demonstrate compliance with regulatory frameworks or social consensus. We illustrate how this mechanism can create a separating equilibrium between compliant and non-compliant withdrawals. Our work describes the technical underpinnings, incentives and broader implications of this mechanism, highlighting how Privacy Pools-like protocols can create more private yet compliant blockchain transactions.

Diego Marmsoler, Billy Thornton

No abstract is available for this record.

Elijah Fox, Mallesh M. Pai, Max Resnick

Modern blockchains guarantee that submitted transactions will be included eventually; a property formally known as liveness. But financial activity requires transactions to be included in a timely manner. Unfortunately, classical liveness is not strong enough to guarantee this, particularly in the presence of a motivated adversary who benefits from censoring transactions. We define censorship resistance as the amount it would cost the adversary to censor a transaction for a fixed interval of time as a function of the associated tip. This definition has two advantages, first it captures the fact that transactions with a higher miner tip can be more costly to censor, and therefore are more likely to swiftly make their way onto the chain. Second, it applies to a finite time window, so it can be used to assess whether a blockchain is capable of hosting financial activity that relies on timely inclusion. We apply this definition in the context of auctions. Auctions are a building block for many financial applications, and censoring competing bids offers an easy-to-model motivation for our adversary. Traditional proof-of-stake blockchains have poor enough censorship resistance that it is difficult to retain the integrity of an auction when bids can only be submitted in a single block. As the number of bidders $n$ in a single block auction increases, the probability that the winner is not the adversary, and the economic efficiency of the auction, both decrease faster than $1/n$. Running the auction over multiple blocks, each with a different proposer, alleviates the problem only if the number of blocks grows faster than the number of bidders. We argue that blockchains with more than one concurrent proposer have can have strong censorship resistance. We achieve this by setting up a prisoner's dilemma among the proposers using conditional tips.