Proceedings of the 3rd ACM Conference on Advances in Financial Technologies最新文献

{"title":"Dynamic posted-price mechanisms for the blockchain transaction-fee market","authors":"Matheus V. X. Ferreira, Daniel J. Moroz, D. Parkes, Mitchell Stern","doi":"10.1145/3479722.3480991","DOIUrl":"https://doi.org/10.1145/3479722.3480991","url":null,"abstract":"In recent years, prominent blockchain systems such as Bitcoin and Ethereum have experienced explosive growth in transaction volume, leading to frequent surges in demand for limited block space and causing transaction fees to fluctuate by orders of magnitude. The status quo auctions sell space using a first-price auction [27]; however, users find it difficult to estimate how much they need to bid in order to get their transactions accepted onto the chain. If they bid too low, their transactions can have long confirmation times. If they bid too high, they pay larger fees than necessary. In light of these issues, new transaction fee mechanisms have been proposed, most notably EIP-1559 [4], aiming to provide better usability. EIP-1559 is a history-dependent mechanism that relies on block utilization to adjust a base fee. We propose an alternative design - a dynamic posted-price mechanism - which uses not only block utilization but also observable bids from past blocks to compute a posted-price for subsequent blocks. We show its potential to reduce price volatility by providing examples for which the prices of EIP-1559 are unstable while the prices of the proposed mechanism are stable. More generally, whenever the demand for the blockchain stabilizes, we ask if our mechanism is able to converge to a stable state. Our main result provides sufficient conditions in a probabilistic setting for which the proposed mechanism is approximately welfare optimal and the prices are stable. Our main technical contribution towards establishing stability is an iterative algorithm that, given oracle access to a Lipschitz continuous and strictly concave function f, converges to a fixed point of f.","PeriodicalId":112726,"journal":{"name":"Proceedings of the 3rd ACM Conference on Advances in Financial Technologies","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127760089","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Dynamical analysis of the EIP-1559 Ethereum fee market","authors":"Stefanos Leonardos, B. Monnot, Daniël Reijsbergen, Stratis Skoulakis, G. Piliouras","doi":"10.1145/3479722.3480993","DOIUrl":"https://doi.org/10.1145/3479722.3480993","url":null,"abstract":"Participation in permissionless blockchains results in competition over system resources, which needs to be controlled with fees. Until recently, Ethereum's fee mechanism was implemented via a first-price auction that resulted in unpredictable fees as well as other inefficiencies. Launched on August 5, 2021, EIP-1559 is an improved proposal that introduces a number of innovative features such as a dynamically adaptive basefee that is burnt, instead of being paid to the miners. Despite intense interest in understanding its properties, several basic questions such as whether and under what conditions does this protocol self-stabilize have remained elusive thus far. We perform a thorough analysis of the resulting fee market dynamic mechanism via a combination of tools from game theory as well as dynamical systems. We start by providing bounds on the step-size of the base-fee update rule that suffice for global convergence to equilibrium via Lyapunov arguments. In the negative direction, we show that for larger step-sizes instability and even formal Li-Yorke chaos are possible under a wide range of settings. We complement these topological results with quantitative bounds on the possible range of basefees. We conclude our analysis with a thorough experimental case study that corroborates our theoretical findings.","PeriodicalId":112726,"journal":{"name":"Proceedings of the 3rd ACM Conference on Advances in Financial Technologies","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121182655","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Achieving state machine replication without honest players","authors":"Conor McMenamin, Vanesa Daza, Matteo Pontecorvi","doi":"10.1145/3479722.3480986","DOIUrl":"https://doi.org/10.1145/3479722.3480986","url":null,"abstract":"Existing standards for player characterisation in tokenised state machine replication protocols depend on honest players who will always follow the protocol, regardless of possible token increases for deviating. Given the ever-increasing market capitalisation of these tokenised protocols, honesty is becoming more expensive and more unrealistic. As such, this out-dated player characterisation must be removed to provide true guarantees of safety and liveness in a major stride towards universal trust in state machine replication protocols and a new scale of adoption. As all current state machine replication protocols are built on these legacy standards, it is imperative that a new player model is identified and utilised to reflect the true nature of players in tokenised protocols, now and into the future. To this effect, we propose the ByRa player model for state machine replication protocols. In the ByRa model, players either attempt to maximise their tokenised rewards, or behave adversarially. This merges the fields of game theory and distributed systems, an intersection in which tokenised state machine replication protocols exist, but on which little formalisation has been carried out. In the ByRa model, we identify the properties of strong incentive compatibility in expectation and fairness that all protocols must satisfy in order to achieve state machine replication. We then provide Tenderstake, a protocol which provably satisfies these properties, and by doing so, achieves state machine replication in the ByRa model.","PeriodicalId":112726,"journal":{"name":"Proceedings of the 3rd ACM Conference on Advances in Financial Technologies","volume":"76 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125875842","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Close latency-security trade-off for the Nakamoto consensus","authors":"Jing Li, Dongning Guo, Ling Ren","doi":"10.1145/3479722.3480992","DOIUrl":"https://doi.org/10.1145/3479722.3480992","url":null,"abstract":"Bitcoin is a peer-to-peer electronic cash system invented by Nakamoto in 2008. While it has attracted much research interest, its exact latency and security properties remain open. Existing analyses provide security and latency (or confirmation time) guarantees that are too loose for practical use. In fact the best known upper bounds are several orders of magnitude larger than a lower bound due to a well-known private-mining attack. This paper describes a continuous-time model for blockchains and develops a rigorous analysis that yields close upper and lower bounds for the latency-security trade-off. For example, when the adversary controls 10% of the total mining power and the block propagation delays are within 10 seconds, a Bitcoin block is secured with less than 10-3 error probability if it is confirmed after four hours, or with less than 10-9 error probability if confirmed after ten hours. These confirmation times are about two hours away from their corresponding lower bounds. To establish such close bounds, the blockchain security question is reduced to a race between the Poisson adversarial mining process and a renewal process formed by a certain species of honest blocks. The moment generation functions of relevant renewal times are derived in closed form. The general formulas from the analysis are then applied to study the latency-security trade-off of several well-known proof-of-work longest-chain cryptocurrencies. Guidance is also provided on how to set parameters for different purposes.","PeriodicalId":112726,"journal":{"name":"Proceedings of the 3rd ACM Conference on Advances in Financial Technologies","volume":"76 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127769683","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"AMR: autonomous coin mixer with privacy preserving reward distribution","authors":"D. Le, Arthur Gervais","doi":"10.1145/3479722.3480800","DOIUrl":"https://doi.org/10.1145/3479722.3480800","url":null,"abstract":"It is well known that users on open blockchains are tracked by an industry providing services to governments, law enforcement, secret services, and alike. While most blockchains do not protect their users' privacy and allow external observers to link transactions and addresses, a growing research interest attempts to design add-on privacy solutions to help users regain their privacy on non-private blockchains. In this work, we propose to our knowledge the first censorship resilient mixer, which can reward its users in a privacy-preserving manner for participating in the system. Increasing the anonymity set size, and diversity of users, is, as we believe, an important endeavor to raise a mixer's contributed privacy in practice. The paid-out rewards can take the form of governance tokens to decentralize the voting on system parameters, similar to how popular \"Decentralized Finance (Defi) farming\" protocols operate. Moreover, by leveraging existing Defi lending platforms, AMR is the first mixer design that allows participating clients to earn financial interest on their deposited funds. Our system AMR is autonomous as it does not rely on any external server or a third party. The evaluation of our AMR implementation shows that the system supports today on Ethereum anonymity set sizes beyond thousands of users, and a capacity of over 66,000 deposits per day, at constant system costs. We provide a formal specification of our zk-SNARK-based AMR system, a privacy and security analysis, implementation, and evaluation with both the MiMC and Poseidon hash functions.","PeriodicalId":112726,"journal":{"name":"Proceedings of the 3rd ACM Conference on Advances in Financial Technologies","volume":"196 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116454209","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"A verifiably secure and proportional committee election rule","authors":"Alfonso Cevallos, Alistair Stewart","doi":"10.1145/3479722.3480988","DOIUrl":"https://doi.org/10.1145/3479722.3480988","url":null,"abstract":"The concept of proportional representation in approval-based committee elections has appeared in the social choice literature for over a century and is typically understood as avoiding the underrepresentation of minorities. However, we argue that the security of some distributed systems critically depends on the opposite goal of preventing the overrepresentation of any minority, a goal not previously formalized that leads us to an optimization objective known as maximin support. After providing a thorough analysis of the computational complexity of this objective, we propose a new efficient election rule that simultaneously achieves a) a constant-factor approximation guarantee for it, and b) the property of proportional justified representation (PJR) - one of the strongest forms of proportional representation. However, the most striking feature of the new rule is that one can verify in linear time that the winning committee satisfies the two aforementioned guarantees, even when the algorithm is executed by an untrusted party who only communicates the output. As a result, the rule can be adapted into a verifiable computing scheme. Moreover, its verification procedure easily admits parallel processing for further efficiency. Our work is motivated by an application on blockchain networks that implement Nominated Proof-of-Stake, where the community elects a committee of validators to participate in the consensus protocol, and where preventing overrepresentation protects the network against attacks by an adversarial minority. Our election rule enables a validator selection protocol with formal guarantees on security and proportionality, and its adaptation as a verifiable computing scheme with a parallelized verification proves to be key for its successful implementation given the computationally limited nature of the blockchain architecture.","PeriodicalId":112726,"journal":{"name":"Proceedings of the 3rd ACM Conference on Advances in Financial Technologies","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124935625","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Coalition-safe equilibria with virtual payoffs","authors":"A. Kiayias, Aikaterini-Panagiota Stouka","doi":"10.1145/3479722.3480795","DOIUrl":"https://doi.org/10.1145/3479722.3480795","url":null,"abstract":"Consider a set of participants invited to execute a protocol Π. The protocol will incur some cost to run while in the end (or at regular intervals), it will populate and update local bookkeeping tables that assign virtual rewards to participants. Each participant aspires to offset the costs of participation by these virtual payoffs that are provided in the course of the protocol and are assumed to be accepted as forms of payment. In this setting, we introduce and study a notion of coalition-safe equilibria. In particular, we consider a strategic coalition of participants that is centrally coordinated and potentially deviates from Π with the objective to increase its utility with respect to the view of at least one of the other participants. The protocol Π is called a coalition-safe equilibrium with virtual payoffs (EVP) if no such protocol deviation exists. We apply our notion to study incentives in blockchain protocols. Compared to prior work, our framework has the advantages that it simultaneously (i) takes into account that each participant may have a divergent view of the rewards given to the other participants, as the reward mechanism employed is subject to consensus among participants (and our notion is well defined independently of whether the underlying protocol achieves consensus or not) (ii) accounts for the stochastic nature of these protocols by enforcing the equilibrium condition to hold with overwhelming probability. We use our framework to provide a unified picture of incentives in the Bitcoin blockchain, for absolute and relative rewards based utility functions. Importantly, we prove that organizing all miners into a single dictatorial pool is an EVP in the setting of non-zero transaction verification costs for coalitions of up to n - 1 participants. In addition we prove novel results regarding incentives of the Fruitchain blockchain protocol [PODC 2017] showing that the equilibrium condition holds for coalitions up to n - 1 participants for absolute rewards based utility functions and less than n/2 for relative rewards based utility functions, with the latter result holding for any \"weakly fair\" blockchain protocol, a new property that we introduce and may be of independent interest.","PeriodicalId":112726,"journal":{"name":"Proceedings of the 3rd ACM Conference on Advances in Financial Technologies","volume":"333 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122989826","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}