One of the purported benefits of blockchain technologies is the ability to house what have been termed ‘smart’ contracts. Such contracts are potentially self-executing depending on the state of information recorded on a blockchain ledger. This paper examines the capabilities of smart contracts from an economic perspective. It is demonstrated that by improving observability and reducing the costs of verification of contract obligation performance, the space of feasible contracts can be enlarged. Moreover, by providing commitments to various monetary payments, a blockchain can potentially create a foundation to house certain mechanisms that have been shown to overcome difficulties of contractual incompleteness. This is demonstrated using a simple international trade environment. Thus, even though smart contracts must respect the incentives of decision-makers in their obligations, they have the potential to use easily verifiable elements to create incentives to reduce hold-up and other contractual difficulties.
We use historical data to estimate the potential benefit of speculative techniques for executing Ethereum smart contracts in parallel. We replay transaction traces of sampled blocks from the Ethereum blockchain over time, using a simple speculative execution engine. In this engine, miners attempt to execute all transactions in a block in parallel, rolling back those that cause data conflicts. Aborted transactions are then executed sequentially. Validators execute the same schedule as miners. \nWe find that our speculative technique yields estimated speed-ups starting at about 8-fold in 2016, declining to about 2-fold at the end of 2017, where speed-up is measured using either gas costs or instruction counts. We also observe that a small set of contracts are responsible for many data conflicts resulting from speculative concurrent execution.
In this work, we perform a comprehensive empirical study of smart contracts deployed on the ethereum blockchain. The objective of the analysis is to provide empirical results on smart contracts features, smart contract transactions within the blockchain, the role of the development community, and the source code characteristics. We collected a set of more than 10000 smart contracts source codes and a dataset of meta-data regarding their interaction with the blockchain from etherscan.io. We examined the collected data computing different statistics on naming policies, smart contract ether balance, number of smart contract transactions, functions, and other quantities characterizing the use and purpose of smart contracts. We found that the number of transactions and the balances follow power-law distributions and the software code metrics display, on average, values lower than corresponding metrics in standard software but have high variances. Focusing the attention on the 20 smart contracts with the topmost number of transactions, we found that most of them represent financial smart contracts and some of them have peculiar software development stories behind them. The results show that blockchain software is rapidly changing and evolving and it is no longer devoted only to cryptovalues applications but to general purpose computation.
In this paper, we present the most extensive evaluation of blockchain system to date. To achieve scalability across servers in more than 10 countries located on 4 different continents, we drastically revisited Byzantine fault tolerant blockchains and verification of signatures. The resulting blockchain, called the Red Belly Blockchain (RBBC), commits more than a hundred thousand transactions issued by permissionless nodes. These transactions are grouped into blocks within few seconds through a partially synchronous consensus run by permissioned nodes. It prevents double spending by guaranteeing that a unique block is decided at any given index of the chain in a deterministic way by all participants. We compared the performance of RBBC against traditional Byzantine fault tolerant alternatives and more recent randomized solutions. In the same geo-distributed environment with low-end machines, we noticed two interesting comparisons: (i) the RBBC throughput scales to hundreds of machines whereas the classic 3-step leader-based BFT state machine used by consortium blockchains cannot scale to 40 identically configured nodes; (ii) RBBC guarantees transaction finality in 3 seconds and experiences a third of the latency that randomized-based solutions like HoneyBadgerBFT can offer. This empirical evaluation demonstrates that blockchain scalability can be achieved without sacrificing security.
Cryptocurrency blockchain technology is attracting worldwide attention, and the number of initial coin offerings (ICOs) is increasing rapidly. This new economic trend, called cryptoeconomics, can program human behavior through incentive design. A cryptocurrency-based incentive system is not only transparent, but also allows businesses to substitute initial investment costs with cryptocurrency tokens until they are on a sustainable growth trajectory in terms of network effects. This study aims to propose a process for building a desirable model of a token economy, based on the case of Steemit—a blogging and social networking website that is creating high values due to its efficient token economy model. We suggest the following design process of a token economy model: (1) Determine token-business fit, (2) determine the chance of success, (3) determine the properties of token, (4) give tokens intrinsic value, (5) establish strategies to raise token value, (6) establish operational strategies of token economy system, (7) establish strategies for token liquidation, and (8) continue modifying the operational base. Considering cryptoeconomics is still at an early stage, it is expected that the guidelines on the token economy model suggested in this paper will lay a significant foundation for the development of cryptoeconomics research.
We present SOLAR, a new analysis tool for automatically detecting standard violation errors in Ethereum smart contracts.Given the Ethereum Virtual Machine (EVM) bytecode of a smart contract and a user specified constraint or invariant derived from a technical standard such as ERC-20,SOLAR symbolically executes the contract, explores all possible execution paths, and checks whether it is possible to initiate a sequence of malicious transactions to violate the specified constraint or invariant. Our experimental results highlight the effectiveness of SOLAR in finding new errors in smart con-tracts. Out of the evaluated 779 ERC-20 and 310 ERC-721smart contracts, SOLAR found 255 standard violation errors in 197 vulnerable contracts with only three false positives.237 out of the 255 errors are zero-day errors that are not re-ported before. Our results sound the alarm on the prevalence of standard violation errors in critical smart contracts that manipulate publicly traded digital assets
Puwei Wang, Ji M, Jinchuan Chen, Tao Liu · 7 authors
Smart contracts (SCs) run on the distributed ledger technology (DLT) platform and can implement agreements between participants without a trusted third party. This paper uses the DLT and SC techniques to build distributed applications composed of existing services. In practice, there are many functionally-equivalent services on the Internet. To beat their competitors, the service providers usually offer flexible QoS and use dynamic pricing strategies. Moreover, the service providers can change at runtime, e.g., they may encounter problems so that their QoS drops suddenly. This makes achieving the optimization goal at runtime (e.g., the maximization of the utility) more difficult. To address this problem, first, this paper proposes an SC-based negotiation framework. The SCs can ensure that the transactions are automatically and reliably performed as agreed upon between the service requesters and providers. The DLTs can provide the reliable data of the requests and responses of the service requesters and providers to the SCs. In addition, the SCs can identify the troubled service providers, and find other service providers to replace them at runtime. Second, this paper proposes a Bayesian Nash equilibrium (BNE) of the service providers. In the BNE, the cost-efficient service providers offer the high QoS the service requester asks for and report their costs truthfully. This BNE enables the selection of the cost-efficient service providers and the achievement of the (near) maximization of the service requesters' utility. This paper implements the proposed negotiation framework on a DLT platform called Hyperledger Fabric. The experiment results demonstrate that the proposed approach outperforms the existing approaches and can adapt to the changes of the service providers.
Blockchain technology is emerging in various fields, to guarantee security of digital currency and internet of things. In this paper, we provide incentive to encourage edge servers to serve mobile users for the mobile blockchain application. We formulate the problem as a resource allocation problem, then we propose a three-stage auction to implement resource allocation specially designed for mobile blockchain, and introduce the group-buying mechanism to motivate mobile users. We prove that our auction scheme is truthful, individual rationality, and computational efficiency. We compare proposed scheme with TACD and HAF mechanisms, and simulation results show that the social welfare achieved by our scheme is higher than that of TACD and HAF mechanisms.
We describe an agent-based conceptual model of a Blockchain system. Blockchain technology enables distributed, encrypted and secure logging of digital transactions in an add-only ledger record. We model and simulate an expanding Blockchain network, describing the participating agents, the transactions, and the verified add-only public ledger record achieving decentralized consensus. All of the essential details of the functioning of the Blockchain including the behaviors and decisions made by agents deciding to join as well as participate in the market are detailed in the prototype model. The aim of this paper is to illustrate the essential elements and functioning of a Blockchain system, implement a generalized simulation and a measure of Blockchain efficiency from an agent choice and energy cost perspective. Our preliminary results indicate that mining choice (transaction block to verify) coupled with proof of work incentives are critical for energy efficiency.
The fundamental problem in digital record-keeping is establishing consensus on an update to a ledger, e.g., a payment. Consensus must be achieved in the presence of faults-situations in which some computers are offline or fail to function appropriately. Traditional centralized record-keeping systems rely on trust in a single entity to achieve consensus. Blockchains decentralize record-keeping, dispensing with the need for trust in a single entity, but some instead build a consensus based on the wasteful expenditure of computational resources (proof-of-work). An ideal method of consensus would be tolerant to faults, avoid the waste of computational resources, and be capable of implementing all individually rational transfers of value among agents. We prove a Blockchain Trilemma: any method of consensus, be it centralized or decentralized, must give up (i) fault-tolerance, (ii) resource-efficiency, or (iii) full transferability.
Auction is an effective way to allocate goods or services to bidders who value them the most. The rapid growth of e-auctions facilitates online transactions but poses new and distinctive challenges. It is difficult to establish trust among sellers, buyers, and auctioneers without centralized auction websites or platforms (the auctioneer) which collect bids and derive the auction results. However, these third parties may be untrustworthy, and malicious sellers or buyers may refuse to deliver the goods or payment according to the protocol. Moreover, the open and anonymous online environment may stimulate auction participants to form collusion coalitions to rig the auction and reap unfair profit. Many auction designs have been proposed to address these concerns, but they fall short of simultaneously achieving decentralization (i.e., held without a trusted third utility), strong consensus (i.e., the establishment of trust), collusion resistance, and practical implementation. We present CReam, the first decentralized collusion-resistant e-auction system that is implemented with smart contract on the blockchain. With the carefully designed smart auction contract, mutually distrustful and rational sellers and buyers are stimulated to operate properly, hence transact safely without trusted third parties. The auction mechanism in the smart contract can effectively prevent bidder collusion and realize economic robustness, i.e., truthfulness. We implement a fully functional CReam on the Ethereum network. Extensive experimental results confirm that CReam can greatly reduce the probability of collusion and achieve an approximate optimal revenue at a low cost of contract execution.
Blockchain technology has been recommended for the sustainability in the manufacturing industry, owing to its benefits in terms of real-time transparency and cost savings. To verify this, we first examine how firms can employ distributed ledger technology by adopting blockchain technology to achieve real-time transparency and cost savings. We also review the current blockchain technology applications in the financial industry and supply chains to explain this technology’s mechanisms for enabling real-time transparency and cost savings in the manufacturing industry. Finally, we theoretically compare the profits of manufacturing firms in two managerial delegation games under a duopoly situation. This theoretical model suggests that the real-time transparency and cost savings secured by blockchain technology improve the profitability and competitiveness of manufacturing firms, which, in turn, assure the sustainability in the manufacturing industry.
In the Bitcoin system, miners are incentivized to join the system and validate transactions through fees paid by the users. A simple "pay your bid" auction has been employed to determine the transaction fees. Recently, Lavi, Sattath and Zohar [Lavi et al., 2019] proposed an alternative fee design, called the monopolistic price (MP) mechanism, aimed at improving the revenue for the miners. Although MP is not strictly incentive compatible (IC), they studied how close to IC the mechanism is for iid distributions, and conjectured that it is nearly IC asymptotically based on extensive simulations and some analysis. In this paper, we prove that the MP mechanism is nearly incentive compatible for any iid distribution as the number of users grows large. This holds true with respect to other attacks such as splitting bids. We also prove a conjecture in [Lavi et al., 2019] that MP dominates the RSOP auction in revenue (originally defined in [Goldberg et al., 2006] for digital goods). These results lend support to MP as a Bitcoin fee design candidate. Additionally, we explore some possible intrinsic correlations between incentive compatibility and revenue in general.
The block chain has achieved great success in bit coin, and its decentralization idea caught highly attention of financial institutions, capital markets and academia. Decentralization is the most fundamental feature of the block chain, but decentralization sacrifices efficiency, while mining leads to high bit coin transaction costs; in some industries, such as the commercial retail, high efficiency and low cost are required. The consensus algorithm is the core technology to achieve non-centralization. This article proposes a DPoS consensus mechanism election algorithm. This algorithm improves the ring-based coordinator election algorithm. First, the algorithm is used to elect the agents, and then the final winner, reach a new consensus, meet the requirements of the block chain performance in the commercial retail sector, reduce transaction costs, and construct a fair, freely competitive, non-monopoly, secure and non-centralized block chain platform.
Bitcoin is a peer-to-peer network that facilitates transactions between parties minus the proof requirement of an appointed third party (i.e., banks or financial institutions). Accurate understanding into the implementation of bitcoin can be acquired from data of the universal record of bitcoin transactions. Although data from numerous websites show that bitcoin daily transactions count has reached capacities of tens of thousands, it is widely believed that most of these transactions comprise activities between speculators and only a few are actually used for trading of goods and services. The chapter explores if bitcoin has achieved the characteristics of money. For it to survive, bitcoin must overcome the problems of its unconventional pricing mechanism, shortage of vendors who accept it, and the circuitous way of obtaining it.
Proposed is a communication system, integrating a distributed ledger with ambient intelligence and a data fusion scheme. It introduces a clear distinction between the financial profitability of investment projects and their contribution to environmental sustainability while ensuring performance measurability and flexibility for both aspects of project management as well as the possibility to trade emission certificates. Two key benefits of the system are the possibility to implement a reliable and straightforward methodology for the evaluation of investments, both ongoing and planned, and the potential to connect the emissions trading scheme with pollution control in the real time. Moreover, the system brings about stability where the revisions of governmental subsidy policies tend to move the break-even costs significantly, thus incentivising for innovative or small-scale projects.
Konstantnim povećanjem postotka ljudske populacije u gradovima povećava se i broj automobila u gradovima. S povećanjem broja automobila dolazi do većeg opterećenja prometa te zahtjeva za novim parkirnim mjestima. Kako bi smanjilo opterećenje prometnica i potražnja za parkirnim mjestima potrebno je osmišljavati nove metode. Jedna od tih metoda je i dijeljenje automobila kojoj je cilj smanjiti vrijeme koje vozilo provode na parkirnom mjestu. Za implementaciju takve metode potrebno je kreirati sustav koji će omogućivati iznajmljivanje i dijeljenje automobila te plaćanje usluge. U ovome radu izraditi će se dio aplikacije za dijeljenje automobila koja će funkcionirati na pametnom ugovoru unutar blockchain-a odnosno distribuiranog zapisnika. Postupak izrade te funkcionalnosti aplikacije objašnjene su unutar rada. Aplikacija se fokusira na plaćanje koristeći pametne ugovore te su opisani ostali dijelovi sustava potrebni za implementaciju aplikacije koje nisu unutar okvira ovoga rada.
Traditionally, the Net Present Value method has been used to compare diverging investment strategies. However, valuating crypto-projects with fiat-based currency is confusing due to extreme coin appreciation rates as compared to fiat interest rates. Here, we provide a net present value method based on using crypto-coin as the underlying asset. Using this method, we compare buy-and-hold versus mine-and-hold; we also provide a sensitivity analysis of profitability.
In the present article, we analyze the transaction fees market on smart contracts-enabling blockchains. On such systems, as opposed to traditional on-premise and cloud computing solutions, users are effectively competing for computational resources through an auction for priority. This paper proposes a way to estimate the bid one has to offer to have a transaction included in the next block. This method outperforms naive bidding (bidding the optimal value of the last block) if the user is realistically "impatient" to have a transaction processed. It also shows that users collectively spend several million of dollar every years for transaction fees that could be avoided without degrading the service received. This is this "waste" we seek to reduce throughour forecasting method.