On March 13, 2024, Ethereum implemented EIP-4844, an upgrade designed to enhance its role as a data availability layer. While this upgrade reduces data posting costs for rollups, it also raises concerns about its impact on consensus security due to the increased volume of propagated data. Moreover, the broader effects on rollup dynamics and the Ethereum ecosystem remain largely unexplored. In this paper, we conduct an empirical analysis of EIP-4844's impact on consensus security, Ethereum usage, rollup transaction dynamics, and the blob gas fee market. We investigate changes in slot sync time, provide quantitative assessments of rollup and user behaviors, and evaluate the efficiency of the blob gas fee market. Our findings reveal that EIP-4844 has successfully increased rollups' usage of Ethereum while lowering rollup transaction fees. However, we also observe a slight rise in the fork rate, though our analysis suggests that this increase is not attributed to blob propagation waiting time. Additionally, some rollup users experience delayed transaction inclusion in Ethereum blocks, which appears to be influenced by cost-minimizing batching strategies. These results demonstrate both the benefits and trade-offs of the upgrade, suggesting future directions for further research on Ethereum's scalability and consensus stability.
We argue that the current POW based consensus algorithm of the Bitcoin network suffers from a fundamental economic discrepancy between the real world transaction (txn) costs incurred by miners and the wealth that is being transacted. Put simply, whether one transacts 1 satoshi or 1 bitcoin, the same amount of electricity is needed when including this txn into a block. The notorious Bitcoin blockchain problems such as its high energy usage per txn or its scalability issues are, either partially or fully, mere consequences of this fundamental economic inconsistency. We propose making the computational cost of securing the txns proportional to the wealth being transferred, at least temporarily. First, we present a simple incentive based model of Bitcoin's security. Then, guided by this model, we augment each txn by two parameters, one controlling the time spent securing this txn and the second determining the fraction of the network used to accomplish this. The current Bitcoin txns are naturally embedded into this parametrized space. Then we introduce a sequence of hierarchical block structures (HBSs) containing these parametrized txns. The first of those HBSs exploits only a single degree of freedom of the extended txn, namely the time investment, but it allows already for txns with a variable level of trust together with aligned network fees and energy usage. In principle, the last HBS should scale to tens of thousands timely txns per second while preserving what the previous HBSs achieved. We also propose a simple homotopy based transition mechanism which enables us to relatively safely and continuously introduce new HBSs into the existing blockchain. Our approach is constructive and as rigorous as possible and we attempt to analyze all aspects of these developments, al least at a conceptual level. The process is supported by evaluation on recent transaction data.
The practical Byzantine fault tolerant (PBFT) consensus protocol is one of the basic consensus protocols in the development of blockchain technology. At the same time, the PBFT consensus protocol forms a basis for some other important BFT consensus protocols, such as Tendermint, Streamlet, HotStuff, and LibraBFT. In general, the voting nodes may always fail so that they can leave the PBFT-based blockchain system in a random time interval, making the number of timely available voting nodes uncertain. Thus, this uncertainty leads to the analysis of the PBFT-based blockchain systems with repairable voting nodes being more challenging. In this paper, we develop a novel PBFT consensus protocol with repairable voting nodes and study such a new blockchain system using a multi-dimensional Markov process and the first passage time method. Based on this, we provide performance and reliability analysis, including throughput, availability, and reliability, for the new PBFT-based blockchain system with repairable voting nodes. Furthermore, we provide an approximate algorithm for computing the throughput of the new PBFT-based blockchain system. We employ numerical examples to demonstrate the validity of our theoretical results and illustrate how the key system parameters influence performance measures of the PBFT-based blockchain system with repairable voting nodes. We hope the methodology and results developed in this paper will stimulate future research endeavors and open up new research trajectories in this field.
Haoran Zhu, Xiaolin Chang, Jelena Mišić, Vojislav B. Mišić · 6 authors
Bitcoin is the largest Proof-of-Work (PoW) public blockchain but is vulnerable to various attacks like stubborn mining attack, which greatly downgrades both system throughput and benefits malicious miners (attackers). The existing works assume miners receive new blocks immediately after block generation, which is away from reality. This article aims to quantify the stubborn mining attack severity in an imperfect Bitcoin network in which there exists block receiving delay. In this article, we first develop an analytic model to capture blockchain dynamics, and then derive formulas of both relative revenue and system throughput, which are applied to study attack severity. Experiment results validate our quantitative analysis method and show that imperfect networks favor attackers. Moreover, the results recommend a blockchain system to be composed of small mining pools to get fair revenue distribution, and minimize its network delay and fork probability to get high TPS.
Haoran Zhu, Xiaolin Chang, Jelena Mišić, Vojislav B. Mišić · 6 authors
GHOST, like the longest-chain protocol, is a chain selection protocol and its capability in resisting selfish mining attack has been validated in imperfect (delay-existing-) blockchains of Bitcoin and its variants (Bitcoin-like). This paper explores an analytical-model-based approach to investigate the impact of stubborn mining attack in imperfect GHOST Bitcoin-like blockchains. We first quantify chain dynamics based on Markov chain process and then derive the formulas of miner revenue and system throughput. We also propose a new metric, “Hazard Index”, which can be used to evaluate attack threat severity and also assist the adversary in determining whether it is profitable to conduct an attack. The experiment results show that 1) An adversary with more than 30% computing power can get huge profit and extremely downgrade system throughput by launching stubborn mining attack. 2) An adversary should not launch stubborn mining attack if it has less than 25% computing power. 3) Stubborn mining attack causes more damage than selfish mining attack under GHOST. Our work provides insight into stubborn mining attack and is helpful in designing countermeasures.
Cryptocurrencies are highly speculative assets with large price volatility. If one could forecast their behavior, this would make them more attractive to investors. In this work we study the problem of predicting the future performance of cryptocurrencies using social media data. We propose a new model to measure the engagement of users with topics discussed on social media based on interactions with social media posts. This model overcomes the limitations of previous volume and sentiment based approaches. We use this model to estimate engagement coefficients for 48 cryptocurrencies created between 2019 and 2021 using data from Twitter from the first month of the cryptocurrencies' existence. We find that the future returns of the cryptocurrencies are dependent on the engagement coefficients. Cryptocurrencies whose engagement coefficients have extreme values have lower returns. Low engagement coefficients signal a lack of interest, while high engagement coefficients signal artificial activity which is likely from automated accounts known as bots. We measure the amount of bot posts for the cryptocurrencies and find that generally, cryptocurrencies with more bot posts have lower future returns. While future returns are dependent on both the bot activity and engagement coefficient, the dependence is strongest for the engagement coefficient, especially for short-term returns. We show that simple investment strategies which select cryptocurrencies with engagement coefficients exceeding a fixed threshold perform well for holding times of a few months.
Centralized monetary policy, leading to persistent inflation, is often inconsistent, untrustworthy, and unpredictable. Algorithmic stablecoins enabled by blockchain technology are promising in solving this problem. Algorithmic stablecoins utilize a monetary policy that is entirely rule-based. However, there is little understanding of how to optimize the rule. We propose a model that trade-off the price for supply stability. We further study the comparative statics by varying several design features. Finally, we discuss the empirical implications for designing stablecoins by the private sector and Central Bank Digital Currency (CBDC) by the public sector.
Bitcoin is a peer-to-peer electronic payment system that has rapidly grown in popularity in recent years. Usually, the complete history of Bitcoin blockchain data must be queried to acquire variables with economic meaning. This task has recently become increasingly difficult, as there are over 1.6 billion historical transactions on the Bitcoin blockchain. It is thus important to query Bitcoin transaction data in a way that is more efficient and provides economic insights. We apply cohort analysis that interprets Bitcoin blockchain data using methods developed for population data in the social sciences. Specifically, we query and process the Bitcoin transaction input and output data within each daily cohort. This enables us to create datasets and visualizations for some key Bitcoin transaction indicators, including the daily lifespan distributions of spent transaction output (STXO) and the daily age distributions of the cumulative unspent transaction output (UTXO). We provide a computationally feasible approach for characterizing Bitcoin transactions that paves the way for future economic studies of Bitcoin.
Smart contracts are autonomous software executing predefined conditions. Two of the biggest advantages of the smart contracts are secured protocols and transaction costs reduction. On the Ethereum platform, an open-source blockchain-based platform, smart contracts implement a distributed virtual machine on the distributed ledger. To avoid denial of service attacks and monetize the services, payment transactions are executed whenever code is being executed between contracts. It is thus natural to investigate if predictive analysis is capable to forecast these interactions. We have addressed this issue and propose an innovative application of the tensor decomposition CANDECOMP/PARAFAC to the temporal link prediction of smart contracts. We introduce a new approach leveraging stochastic processes for series predictions based on the tensor decomposition that can be used for smart contracts predictive analytics.
Background: Past few months have seen the rise of blockchain and cryptocurrencies. In this context, the Ethereum platform, an open-source blockchain-based platform using Ether cryptocurrency, has been designed to use smart contracts programs. These are self-executing blockchain contracts. Due to their high volume of transactions, analyzing their behavior is very challenging. We address this challenge in our paper. Methods: We develop for this purpose an innovative approach based on the non-negative tensor decomposition Paratuck2 combined with long short-term memory. The objective is to assess if predictive analysis can forecast smart contracts activities over time. Three statistical tests are performed on the predictive analytics, the mean absolute percentage error, the mean directional accuracy and the Jaccard distance. Results: Among dozens of GB of transactions, the Paratuck2 tensor decomposition allows asymmetric modeling of the smart contracts. Furthermore, it highlights time dependent latent groups. The latent activities are modeled by the long short term memory network for predictive analytics. The highly accurate predictions underline the accuracy of the method and show that blockchain activities are not pure randomness. Conclusion: Herein, we are able to detect the most active contracts, and predict their behavior. In the context of future regulations, our approach opens new perspective for monitoring blockchain activities.