We propose blockchains and smart contracts as enabling technologies for an innovative type of supply chain management, with the goal of achieving higher levels of collaboration between the companies participating in the chain, which in turn pays in the form of higher levels of profitability and economic health for the participating enterprises. Our proposal goes far beyond simply using blockchains as decentralized systems to track the origin and delivery of goods, which is what most of the current blockchain projects on supply chains are focused on. In fact, we introduce a type of smart contract aimed to solve two of the main problems that hinder the efficiency and effectiveness of supply chains, namely trust and coordination . Solving the problem of trust amounts to the capability of establishing quickly and cheaply contractual relationships based on convergent business needs among parties that may not know each other, and therefore need to protect themselves from opportunistic or incorrect behavior. Solving the problem of coordination consists in creating, at convenient management costs, a control system capable of directing the objectives of the supply chain as a whole, so as to achieve a greater common good in the medium term, as an alternative to the state of affairs in which each participant pursues, on its own behalf, lower but immediate returns. Our smart contracts for innovative supply chain management replace human coordinators in tackling the problems above, thus eliminating one major obstacle to their effective solution, namely the need to trust the coordinator itself. Furthermore, in this way, by automating the process of coordination, they unburden the supply chain of a considerable management cost. Contracts of this kind not only automate contract execution as in standard smart contracts, but also adjust costs and compensations of the members of a supply chain, effectively taking up the role that was of human coordinators. Thus, we refer to them as âintelligent smart contracts.â In the course of the paper, we will illustrate an innovative supply chain architecture based on intelligent smart contracts running on blockchain, we will detail the algorithmic methodologies underlying the decision-making process of these contracts and we will outline the wider socio-economic perspectives opened by our approach.
Self-executing smart contract is believed to revolutionize global procurement by eliminating payment delay and enhancing transaction efficiency. This paper studies the value of smart contract in global procurement, and how the tariff regulations (specific tariff and ad valorem tariff) would affect the retailerâs preference of adopting smart contract.
Compared to traditional contract, the adoption of smart contract alleviates the supplierâs cost pressure while induces the retailerâs cash opportunity cost. Therefore, whether to adopt smart contract in global procurement becomes the retailerâs strategic and practice-relevant decision. The investigation of import tariffs also appears new in the literature.
We develop a game-theoretical model consisting of a retailer and an overseas supplier, where the retailer resells the supplierâs products and also sells self-brand products under the regulation of either a specific or an ad valorem tariff. Under both the tariffs, the retailer adopts either the traditional contract or smart contract to procure from the supplier.
We identify interesting interactions among tariff regulations, the supplierâs pricing decisions, and the value of cash opportunity cost (information update) under smart contract (traditional contract). We find that an increased specific tariff reduces the retailerâs incentives to adopt smart contract, while an increased ad valorem tariff could strengthen the retailerâs incentives to adopt smart contract. Interestingly, we find that, if the retailer faces high demand uncertainty, smart contract could be more profitable given the retailerâs low cash opportunity cost and a moderate ad valorem tariff rate.
Our results can be insightful for the retailers who plan to adopt smart contract but worry about the cash opportunity cost issues. We uncover the rationales of import tariffs promoting or hindering the FinTech (Financial Technology) adoption in global procurement.
Abstract The Innovation Bank is a novel business method that integrates and capitalizes knowledge assets. The Innovation Bank is an application of game theory, actuarial math and a simple native âproof-of-stakeâ blockchain. The system aims to unify the global engineering and scientific disciplines by incentivizing individual practitioners to form knowledge asset networks among each other by producing claims and validations related to observable and measurable events. Each claim and associated validation forms a node in a network for which each participant is awarded a cryptographic token memorializing earned stake (equity) in the system. A secure, validated, and decentralized knowledge repository and access management system is secured by a simple native blockchain. Revenue is generated through the liquidation of earned tokens on an external market to third parties seeking access to network metadata for business intelligence. The intrinsic value of the network grows as the number of participants increases. As participation increases, the quantity and quality of the transaction records also increases. Third-party buyers may include banks, insurance companies, and private enterprise.
Many empirical software engineering studies show that there is a need for repositories where source codes are acquired, filtered and classified. During the last few years, Ethereum block explorer services have emerged as a popular project to explore and search for Ethereum blockchain data such as transactions, addresses, tokens, smart contractsâ source codes, prices and other activities taking place on the Ethereum blockchain. Despite the availability of this kind of service, retrieving specific information useful to empirical software engineering studies, such as the study of smart contractsâ software metrics, might require many subtasks, such as searching for specific transactions in a block, parsing files in HTML format, and filtering the smart contracts to remove duplicated code or unused smart contracts. In this paper, we afford this problem by creating Smart Corpus, a corpus of smart contracts in an organized, reasoned and up-to-date repository where Solidity source code and other metadata about Ethereum smart contracts can easily and systematically be retrieved. We present Smart Corpusâs design and its initial implementation, and we show how the data set of smart contractsâ source codes in a variety of programming languages can be queried and processed to get useful information on smart contracts and their software metrics. Smart Corpus aims to create a smart-contract repository where smart-contract data (source code, application binary interface (ABI) and byte code) are freely and immediately available and are classified based on the main software metrics identified in the scientific literature. Smart contractsâ source codes have been validated by EtherScan, and each contract comes with its own associated software metrics as computed by the freely available software PASO. Moreover, Smart Corpus can be easily extended as the number of new smart contracts increases day by day.
Nov 7, 2020·Proceedings of the 28th ACM Joint Meeting on European Software Engineering Conference and Symposium on the Foundations of Software Engineering
Smart contracts are computer programs allowing users to define and execute transactions automatically on top of the blockchain platform. Many of such smart contracts can be viewed as games. A game-like contract accepts inputs from multiple participants, and upon ending, automatically derives an outcome while distributing assets according to some predefined rules. Without clear understanding of the game rules, participants may suffer from fraudulent advertisements and financial losses. In this paper, we present a framework to perform (semi-)automated verification of smart contract fairness, whose results can be used to refute false claims with concrete examples or certify contract implementations with respect to desired fairness properties. We implement FairCon, which is able to check fairness properties including truthfulness, efficiency, optimality, and collusion-freeness for Ethereum smart contracts. We evaluate FairCon on a set of real-world benchmarks and the experiment result indicates that FairCon is effective in detecting property violations and able to prove fairness for common types of contracts.
Sebastian BÄnescu, Martin Derka, Jan Gorzny, Sung-Shine Lee · 5 authors
Smart contracts are code fragments that automatically execute on distributed ledgers or blockchains. Smart contracts are typically executed by all block producers on a proof-of-work blockchain. As a result, smart contracts have their computational resources limited in order to prevent denial of service attacks on the blockchain, which would decrease its responsiveness, i.e. block creation throughput. Subsequently, updating values for a large number of records becomes infeasible on the scale of existing centralized services. We present a solution to this problem, when all numerical values of records need to be updated, i.e. in/de-creased proportionally. Our solution uses a mechanism similar to cryptocurrency tokens to track record values and enables constant-time updates for these values.
João Paulo de Brito Gonçalves, Roberta Lima Gomes, Rodolfo da Silva Villaça, Esteban Municio · 5 authors
Service Level Agreements (SLAs) are used in contracts between two parts, which can be, as an example, between service providers or between customers and service providers. SLA clauses represent key aspects in the relationship between them. In order to enforce service reliability and SLA compliance, a continuous monitoring of Quality of Service metrics is required. Since policy breach is usually subject to expensive penalties, using external entities acting as trustful references is a common practice in order to avoid frequent legal disputes, external entities are usually required to verify it. However, coordination between different actors to agree in one transaction is difficult, because it can open up possibilities for multiple fraud attempts. We argue that this can be done more efficiently using Smart Contracts, programs that are executed in a blockchain. Such data is stored in a distributed structure without the need of an external entity to ensure data integrity and reliability. Smart contracts can also makes easy the charging or possibly compensating SLA violations. In this paper we propose a solution empowered by smart contracts in order to simplify, and to automate the process of SLA validation, i.e, verify if the contract is being respected. We perform some experiments and evaluate a proof of concept using data from a real network infrastructure in Brazil.
Tamara BrandstĂ€tter, Stefan Schulte, JĂŒrgen Cito, Michael Borkowski
On many blockchain platforms, gas fees have to be paid for deploying and executing smart contracts. These fees depend on the size of the contract code as well as the needed computational steps and required storage space of a smart contract. Because of the large amount of gas cost paid each day, there is an inherent motivation to optimize smart contract code in order to reduce these cost. Within this paper, we discuss the application of 25 strategies for code optimization to Solidity smart contracts. A prototype is developed which detects potential optimizations and partially automatically optimizes the code accordingly. The optimization strategies are evaluated based on 3,018 verified open source smart contracts from etherscan.io. We find 471 rule violations in the test data spread across 204 different contract files.
Permissionless blockchain systems, such as Bitcoin, rely on users using their computational power to solve a puzzle in order to achieve a consensus. To incentivise users in maintaining the system, newly minted coins are assigned to the user who solves this puzzle. A hardware race that has hence ensued among the users, has had a detrimental impact on the environment, with enormous energy consumption and increased global carbon footprint. On the other hand, proof of stake systems incentivise coin hoarding as players maximise their utility by holding their stakes. As a result, existing cryptocurrencies do not mimic the day-to-day usability of a fiat currency, but are rather regarded as crypto-assets or investment vectors. In this work we initiate the study of minting mechanisms in cryptocurrencies as a primitive on its own right, and as a solution to prevent coin hoarding we propose a novel minting mechanism based on waiting-time first-price auctions. Our main technical tool is a protocol to run an auction over any blockchain. Moreover, our protocol is the first to securely implement an auction without requiring a semi-trusted party, i.e., where every miner in the network is a potential bidder. Our approach is generically applicable and we show that it is incentive-compatible with the underlying blockchain, i.e., the best strategy for a player is to behave honestly. Our proof-of-concept implementation shows that our system is efficient and scales to tens of thousands of bidders.
Mohammad Hamdaqa, Lucas Alberto Pineda Metz, Ilham Qasse
Smart contracts are immutable digital programs deployed onto blockchain platforms to codify agreements. They enable blockchain technology to play a vital role in many fields, such as finance, health care, and energy. An important aspect of modeling and deploying smart contracts is to define the business process and rules that govern the agreements under which the corresponding actions are executed. Unfortunately, these models use a mix of technical and business-centric terminologies that are different based on the underlying blockchain platform that the smart contract is targeting. To address this issue, in this paper, we followed a feature-oriented domain analysis approach to identify the commonalities and variations between three of the common blockchain platforms that are used to deploy smart contracts; namely IBM Hyperledger Composer, Azure Blockchain Workbench, and Ethereum. Accordingly, we propose a reference model for smart contracts. The reference model is then realized as a modeling framework that enables developers to model and generate the structural code required to deploy a smart contract onto multiple blockchain platforms. The coverage of the proposed reference model was shown through mapping the concepts of the reference models to its corresponding constructs within each blockchain platform. Moreover, we provide three use cases to show how the proposed framework can empower developers to generate the structural code of smart contracts for the target platform through model transformation.
Markus Nissl, Emanuel Sallinger, Stefan Schulte, Michael Borkowski
In recent years, manifold blockchain protocols have been proposed by researchers and industrial companies alike. This has led to a very heterogeneous blockchain landscape. Accordingly, it would be desirable if blockchains could interact with each other. However, current blockchain technologies offer only limited support for interoperability, thus preventing tokens or smart contracts from leaving the scope of a particular blockchain. As a first step towards a solution for cross-chain smart contract interactions, we introduce a framework which allows to invoke a smart contract from another blockchain. We offer support for continuing a smart contract after receiving a result from a different blockchain, and for calling smart contracts recursively across blockchains. We provide a reference implementation for Ethereum-based blockchains using Solidity and evaluate the performance regarding time and cost overheads.
Smart contract is an event-driven code contract with state attributes, which has been widely concerned and studied with the deep development of blockchain technology. This article proposes a new smart contract architecture, and discusses the main functions implemented at each layer and some of the key technologies and their operation mechanism in the blockchain. On this basis, it is attempted to establish a core description of commitment, and use a finite state machine to implement a formal description of smart contracts with the support of actions and finite periods. Finally, a commercial contract is implemented on the blockchain as an example to verify the feasibility of this standardized definition of smart contracts.
It is an important decision-making problem for a miner in the blockchain networks if he/she participates in the mining so that he/she earns a reward by creating a new block earlier than other miners. We formulate this decision-making problem as a noncooperative game, because the probability of creating a block depends not only on one's own available computational resources, but also those of other miners. Through theoretical and numerical analyses, we show a hysteresis phenomenon of Nash equilibria depending on the reward and a jump phenomenon of miner decisions by a slight change in reward. We also show that the reward for which miners decide not to participate in the mining becomes smaller as the number of miners increases.
The boom of public blockchains and smart contract platforms opened new approaches to solve existing issues. These new approaches addressed successfully some weaknesses of previous processes and created some new classes of problems that need solutions. In this paper we explore distributed system based on smart contract platform with a low-entry barrier designed for direct incentivization of results of scientific research. The proposed system relies on transparent interactions between organizations and individual scientist defining hard computational problems with others that are willing to invest time and efforts searching for computational solutions.
Srinidhi Srinivasan, Rubasri Sundar, Sam Joy Herald Immanuel, Ramesh Belvadi · 5 authors
In light of the multiple legal issues, compliance and disruptions caused by the pandemic, organisations searching for new solutions need to know what smart contracts are and how they would function under the legal doctrine of force majeure in light of COVID-19. The Blockchains which use Bitcoin type of scripts have been popular as payment solutions, but it is less used as smart contracts. In the case of multi-level games and incremental project payments, there is a high potential to use Bitcoin type of scripts, but it is not being used currently. Interestingly, there have been attempts to associate smart contract mainly using Ethereum Blockchain but not with Bitcoin type of scripts. This article intends to demonstrate the novelty of designing smart contracts using Bitcoin type of scripts for hierarchical execution of smart contracts. An attempt is done to show its application in two use cases (multi-level reward games payment and incremental project payment). An evaluation is done with three methods each having a combination of pros and cons based on the requirements which aids in understanding for transparency and control over funds through Blockchain.
We suggest the re-introduction of bartering to create a cryptocurrencyless, currencyless, and moneyless economy segment. We contend that a barter economy would benefit enterprises, individuals, governments and societies. For instance, the availability of an online peer-to-peer barter marketplace would convert ordinary individuals into potential traders of both tangible and digital items and services. For example, they will be able to barter files and data that they collect. Equally motivating, they will be able to barter and re-introduce to the economy items that they no longer need such as, books, garden tools, and bikes which are normally kept and wasted in garages and sheds. We argue that most of the pieces of technology needed for building a barter system are now available, including blockchains, smart contracts, cryptography, secure multiparty computations and fair exchange protocols. However, additional research is needed to refine and integrate the pieces together. We discuss potential research directions.
We propose a secure and efficient implementation of fungible tokens on Bitcoin. Our technique is based on a small extension of the Bitcoin script language, which allows the spending conditions in a transaction to depend on the neighbour transactions. We show that our implementation is computationally sound: that is, adversaries can make tokens diverge from their ideal functionality only with negligible probability.
We develop a formal model of Algorand stateless smart contracts (stateless ASC1.) We exploit our model to prove fundamental properties of the Algorand blockchain, and to establish the security of some archetypal smart contracts. While doing this, we highlight various design patterns supported by Algorand. We perform experiments to validate the coherence of our formal model w.r.t. the actual implementation.
Tao Li, Yuling Chen, Yanli Wang, Yilei Wang · 9 authors
Blockchain has been an emerging technology, which comprises lots of fields such as distributed systems and Internet of Things (IoT). As is well known, blockchain is the underlying technology of bitcoin, whose initial motivation is derived from economic incentives. Therefore, lots of components of blockchain (e.g., consensus mechanism) can be constructed toward the view of game theory. In this paper, we highlight the combination of game theory and blockchain, including rational smart contracts, game theoretic attacks, and rational mining strategies. When put differently, the rational parties, who manage to maximize their utilities, involved in blockchain chose their strategies according to the economic incentives. Consequently, we focus on the influence of rational parties with respect to building blocks. More specifically, we investigate the research progress from the aspects of smart contract, rational attacks, and consensus mechanism, respectively. Finally, we present some future directions based on the brief survey with respect to game theory and blockchain.
This paper presents a novel emulation concept for the test of smartcontracts and Distributed Ledger Technologies (DLT) in distributecontrol or energy economy tasks and use cases. The concept usesstate of the art behavioral modeling tools such as Matlab Simulinkbut presents a possible way to solve the shortfall of Simulink incommunicating to DLT-Nodes directly. This is solved througha middleware solution. After this, an example used in verifyingthe test bed is presented and the target demonstration object is de-scribed. Finally, the possible expansion of the system is discussedand presented.
Joao Martins, Manuel Parente, MĂĄrio AmorimâLopes, Luis Amaral · 7 authors
Firms have available many forms of collaboration, including cooperatives or joint ventures, in this way leveraging their market power. Customers, however, are atomic agents with few mechanisms for collaborating, leading to an unbalanced buyer-supplier relationship and economic surpluses that shift to producers. Some group buying websites helped alleviate the problem by offering bulk discounts, but more advancements can be made with the emergence of technologies, such as the blockchain. In this article, we propose a customer-push e-marketplace built on top of Ethereum, where customers can aggregate their proposals, and suppliers try to outcompete each other in reverse auction bids to fulfil the order. Furthermore, smart contracts make it possible to automate many operational activities, such as payment escrows/release upon delivery confirmation, increasing the efficiency along the supply chain. The implementation of this network is expected to improve market efficiency by reducing transaction costs, time delays, and information asymmetry. Furthermore, concepts such as increased bargaining power and economies of scale, and their effects in buyer-supplier relationships, are also explored.
Michael Darlin, Nikolaos Papadis, Leandros Tassiulas
The Maker Protocol is a decentralized finance application that enables collateralized lending. The application uses open-bid, second-price auctions to complete its loan liquidation process. In this paper, we develop a bidding function for these auctions, focusing on the costs incurred to participate in the auctions. We then optimize these costs using parameters from historical auction data, and compare our optimal bidding prices to the historical auction prices. We find that the majority of auctions end at higher prices than our recommended optimal prices, and we propose several theories for these results.