Volume
LIPIcs, Volume 354
7th Conference on Advances in Financial Technologies (AFT 2025)
-
Part of:
Series:
Leibniz International Proceedings in Informatics (LIPIcs)
Conference: Advances in Financial Technologies (AFT)
Event
AFT 2025, October 8-10, 2025, Pittsburgh, PA, USAEditors
Publication Details
- published at: 2025-10-06
- Publisher: Schloss Dagstuhl – Leibniz-Zentrum für Informatik
- ISBN: 978-3-95977-400-0
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Document
Complete Volume
LIPIcs, Volume 354, AFT 2025, Complete Volume
Abstract
LIPIcs, Volume 354, AFT 2025, Complete Volume
Cite as
7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 1-802, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@Proceedings{avarikioti_et_al:LIPIcs.AFT.2025,
title = {{LIPIcs, Volume 354, AFT 2025, Complete Volume}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {1--802},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025},
URN = {urn:nbn:de:0030-drops-248097},
doi = {10.4230/LIPIcs.AFT.2025},
annote = {Keywords: LIPIcs, Volume 354, AFT 2025, Complete Volume}
}
Document
Front Matter
Front Matter, Table of Contents, Preface, Conference Organization
Abstract
Front Matter, Table of Contents, Preface, Conference Organization
Cite as
7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 0:i-0:xx, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{avarikioti_et_al:LIPIcs.AFT.2025.0,
author = {Avarikioti, Zeta and Christin, Nicolas},
title = {{Front Matter, Table of Contents, Preface, Conference Organization}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {0:i--0:xx},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.0},
URN = {urn:nbn:de:0030-drops-248080},
doi = {10.4230/LIPIcs.AFT.2025.0},
annote = {Keywords: Front Matter, Table of Contents, Preface, Conference Organization}
}
Document
Cache Timing Leakages in Zero-Knowledge Protocols
Abstract
The area of modern zero-knowledge proof systems has seen a significant rise in popularity over the last couple of years, with new techniques and optimized constructions emerging on a regular basis.
As the field matures, the aspect of implementation attacks becomes more relevant, however side-channel attacks on zero-knowledge proof systems have seen surprisingly little treatment so far. In this paper, we give an overview of potential attack vectors and show that some of the underlying finite field libraries, and implementations of heavily used components like hash functions using them, are vulnerable w.r.t. cache attacks on CPUs.
On the positive side, we demonstrate that the computational overhead to protect against these attacks is relatively small.
Cite as
Shibam Mukherjee, Christian Rechberger, and Markus Schofnegger. Cache Timing Leakages in Zero-Knowledge Protocols. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 1:1-1:26, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{mukherjee_et_al:LIPIcs.AFT.2025.1,
author = {Mukherjee, Shibam and Rechberger, Christian and Schofnegger, Markus},
title = {{Cache Timing Leakages in Zero-Knowledge Protocols}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {1:1--1:26},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.1},
URN = {urn:nbn:de:0030-drops-247201},
doi = {10.4230/LIPIcs.AFT.2025.1},
annote = {Keywords: zero-knowledge, protocol, cache timing, side-channel, leakage}
}
Document
Zero-Knowledge Authenticator for Blockchain: Policy-Private and Obliviously Updateable
Abstract
Transaction details and participant identities on the blockchain are often publicly exposed. In this work, we posit that blockchain’s transparency should not come at the cost of privacy. To that end, we introduce zero-knowledge authenticators (zkAt), a new cryptographic primitive for privacy-preserving authentication on public blockchains. zkAt utilizes zero-knowledge proofs to enable users to authenticate transactions, while keeping the underlying authentication policies private.
Prior solutions for such policy-private authentication required the use of threshold signatures, which can only hide the threshold access structure itself. In comparison, zkAt provides privacy for arbitrarily complex authentication policies, and offers a richer interface even within the threshold access structure by, for instance, allowing for the combination of signatures under distinct signature schemes.
In order to construct zkAt, we design a compiler that transforms the popular Groth16 non-interactive zero knowledge (NIZK) proof system into a NIZK with equivocable verification keys, a property that we define in this work. Then, for any zkAt constructed using proof systems with this new property, we show that all public information must be independent of the policy, thereby achieving policy-privacy.
Next, we give an extension of zkAt, called zkAt^+ wherein, assuming a trusted authority, policies can be updated obliviously in the sense that a third-party learns no new information when a policy is updated by the policy issuer. We also give a theoretical construction for zkAt^+ using recursive NIZKs, and explore the integration of zkAt into modern blockchains. Finally, to evaluate their feasibility, we implement both our schemes for a specific threshold access structure. Our findings show that zkAt achieves comparable performance to traditional threshold signatures, while also attaining privacy for significantly more complex policies with very little overhead.
Cite as
Kostas Kryptos Chalkias, Deepak Maram, Arnab Roy, Joy Wang, and Aayush Yadav. Zero-Knowledge Authenticator for Blockchain: Policy-Private and Obliviously Updateable. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 2:1-2:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{kryptoschalkias_et_al:LIPIcs.AFT.2025.2,
author = {Kryptos Chalkias, Kostas and Maram, Deepak and Roy, Arnab and Wang, Joy and Yadav, Aayush},
title = {{Zero-Knowledge Authenticator for Blockchain: Policy-Private and Obliviously Updateable}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {2:1--2:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.2},
URN = {urn:nbn:de:0030-drops-247218},
doi = {10.4230/LIPIcs.AFT.2025.2},
annote = {Keywords: Blockchain privacy, authentication schemes, threshold wallets, zero knowledge proofs}
}
Document
Fast, Private and Regulated Payments in Asynchronous Networks
Abstract
We propose a decentralized asset-transfer system that enjoys full privacy: no party can learn the details of a transaction, except for its issuer and its recipient. Furthermore, the recipient is not aware of the sender’s identity. Our system does not rely on consensus or synchrony assumptions, and therefore, it is responsive, since it runs at the actual network speed. Under the hood, every transaction creates a consumable coin equipped with a non-interactive zero-knowledge proof (NIZK) that confirms that the issuer has sufficient funds without revealing any information about her identity, the recipient’s identity, or the payment amount. Moreover, we equip our system with a regulatory enforcement mechanism that can be used to regulate transfer limits or restrict specific addresses from sending or receiving funds, while preserving the system’s privacy guarantees.
Finally, we report on PaxPay, our implementation of Fully Private Asset Transfer (FPAT) that uses the Gnark library for the NIZKs. In our benchmark, PaxPay exhibits better performance than earlier proposals that either ensure only partial privacy, require some kind of network synchrony or do not implement regulation features. Our system thus reconciles privacy, responsiveness, regulation enforcement and performance.
Cite as
Maxence Brugeres, Victor Languille, Petr Kuznetsov, and Hamza Zarfaoui. Fast, Private and Regulated Payments in Asynchronous Networks. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 3:1-3:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{brugeres_et_al:LIPIcs.AFT.2025.3,
author = {Brugeres, Maxence and Languille, Victor and Kuznetsov, Petr and Zarfaoui, Hamza},
title = {{Fast, Private and Regulated Payments in Asynchronous Networks}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {3:1--3:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.3},
URN = {urn:nbn:de:0030-drops-247227},
doi = {10.4230/LIPIcs.AFT.2025.3},
annote = {Keywords: Anonymous, Asset Transfer, Asynchronous System, BFT, CBDC, NIZK, Payment System, Privacy, Regulation, Scalability, zk-SNARK}
}
Document
Proxying Is Enough: Security of Proxying in TLS Oracles and AEAD Context Unforgeability
Abstract
TLS allows a client to securely obtain data from a server, but does not allow the client to offer the data provenance to an external node. TLS oracle protocols are used to solve the problem. Specifically, the verifier node, as an external node, is convinced that the data is indeed coming from a pre-defined TLS server, while remaining unable to access the client’s credentials (e.g., password). Previous TLS oracle protocols such as DECO (CCS 2020) enforced the communication pattern of server-client-verifier and utilized a novel three-party handshake process during TLS to ensure data integrity against potential tempering by the client. However, this approach introduces a significant performance penalty on the client and the verifier. Most recently, some works have proposed to reduce the overhead by putting the verifier (as a proxy) between the server and the client such that the correct TLS transcript is available to the verifier. Nevertheless, these works still rely on heavy two-party secure computations or zero-knowledge proofs. In this work, we push the proxy model to the extreme, where the verifier only needs to forward messages without performing any other heavy computational operations when only the credentials should be protected and the data retrieved from the server could be open to the verifier. Surprisingly, we prove that the thorough proxy model is enough to guarantee security in some common scenarios, allowing a saving of 60-90% in running time under common scenarios.
We first formalize the proxy-based Oracle protocol and functionality that allows the verifier to directly proxy client-server TLS communication, without entering a three-party handshake or interfering with the connection in any way. We then show that for common TLS-based higher-level protocols such as HTTPS, data integrity to the verifier proxy is ensured by the variable padding built into the HTTP protocol semantics. On the other hand, if a TLS-based protocol comes without variable padding, we demonstrate that data integrity cannot be guaranteed. In this context, we then study the case where the TLS response is pre-determined and cannot be tampered with during the connection. We propose the concept of context unforgeability and show that data integrity can also be guaranteed as long as the underlying Authenticated Encryption with Associated Data (AEAD) satisfies context unforgeability. We further show that ChaCha20-Poly1305 satisfies the concept while AES-GCM does not.
Cite as
Zhongtang Luo, Yanxue Jia, Yaobin Shen, and Aniket Kate. Proxying Is Enough: Security of Proxying in TLS Oracles and AEAD Context Unforgeability. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 4:1-4:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{luo_et_al:LIPIcs.AFT.2025.4,
author = {Luo, Zhongtang and Jia, Yanxue and Shen, Yaobin and Kate, Aniket},
title = {{Proxying Is Enough: Security of Proxying in TLS Oracles and AEAD Context Unforgeability}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {4:1--4:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.4},
URN = {urn:nbn:de:0030-drops-247231},
doi = {10.4230/LIPIcs.AFT.2025.4},
annote = {Keywords: Oracle, TLS, AEAD, Key Commitment}
}
Document
Blockchain Governance via Sharp Anonymous Multisignatures
Abstract
Electronic voting has occupied a large part of the cryptographic protocols literature. The recent reality of blockchains - in particular, their need for online governance mechanisms - has brought new parameters and requirements to the problem. We identify the key requirements of a blockchain governance mechanism, namely correctness (including eliminative double votes), voter anonymity, and traceability, and investigate mechanisms that can achieve them with minimal interaction and under assumptions that fit the blockchain setting.
First, we define a signature-like primitive, which we term sharp anonymous multisignatures (in short, ♯AMS) that tightly meets the needs of blockchain governance. In a nutshell, ♯AMSs allow any set of parties to generate a signature, e.g., on a proposal to be voted upon, which, if posted on the blockchain, hides the identities of the signers/voters but reveals their number. This can be seen as a (strict) generalization of threshold ring signatures (TRS).
We next turn to constructing such ♯AMSs and using them in various governance scenarios - e.g., single vote vs. multiple votes per voter. In this direction, although the definition of TRS does not imply ♯AMS, one can compile some existing TRS constructions into ♯AMS. This raises the question: What is the TRS structure that allows such a compilation? To answer the above, we devise templates for TRSs. Our templates encapsulate and abstract the structure that allows for the above compilation - most of the TRS schemes that can be compiled into ♯AMS are, in fact, instantiations of our template. This abstraction makes our template generic for instantiating TRSs and ♯AMSs from different cryptographic assumptions (e.g., DDH, LWE, etc.). One of our templates is based on chameleon hashes, and we explore a framework of lossy chameleon hashes to understand their nature fully.
Finally, we turn to how ♯AMS schemes can be used in our applications. We provide fast (in some cases non-interactive) ♯AMS-based blockchain governance mechanisms for a wide spectrum of assumptions on the honesty (semi-honest vs malicious) and availability of voters and proposers.
Cite as
Wonseok Choi, Xiangyu Liu, and Vassilis Zikas. Blockchain Governance via Sharp Anonymous Multisignatures. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 5:1-5:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{choi_et_al:LIPIcs.AFT.2025.5,
author = {Choi, Wonseok and Liu, Xiangyu and Zikas, Vassilis},
title = {{Blockchain Governance via Sharp Anonymous Multisignatures}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {5:1--5:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.5},
URN = {urn:nbn:de:0030-drops-247242},
doi = {10.4230/LIPIcs.AFT.2025.5},
annote = {Keywords: Blockchain, E-voting, Threshold Ring Signatures, Threshold Cryptography}
}
Document
Modeling Loss-Versus-Rebalancing in Automated Market Makers via Continuous-Installment Options
Abstract
This paper mathematically models a constant-function automated market maker (CFAMM) position as a portfolio of exotic options, known as perpetual American continuous-installment (CI) options. This model replicates an AMM position’s delta at each point in time over an infinite time horizon, thus taking into account the perpetual nature and optionality to withdraw of liquidity provision. This framework yields two key theoretical results: (a) It proves that the AMM’s adverse-selection cost, loss-versus-rebalancing (LVR), is analytically identical to the continuous funding fees (the time value decay or theta) earned by the at-the-money CI option embedded in the replicating portfolio. (b) A special case of this model derives an AMM liquidity position’s delta profile and boundaries that suffer approximately constant LVR, up to a bounded residual error, over an arbitrarily long forward window. Finally, the paper describes how the constant volatility parameter required by the perpetual option can be calibrated from the term structure of implied volatilities and estimates the errors for both implied volatility calibration and LVR residual error. Thus, this work provides a practical framework enabling liquidity providers to choose an AMM liquidity profile and price boundaries for an arbitrarily long, forward-looking time window where they can expect an approximately constant, price-independent LVR. The results establish a rigorous option-theoretic interpretation of AMMs and their LVR, and provide actionable guidance for liquidity providers in estimating future adverse-selection costs and optimizing position parameters.
Cite as
Srisht Fateh Singh, Reina Ke Xin Li, Samuel Gaskin, Yuntao Wu, Jeffrey Klinck, Panagiotis Michalopoulos, Zissis Poulos, and Andreas Veneris. Modeling Loss-Versus-Rebalancing in Automated Market Makers via Continuous-Installment Options. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 6:1-6:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{singh_et_al:LIPIcs.AFT.2025.6,
author = {Singh, Srisht Fateh and Li, Reina Ke Xin and Gaskin, Samuel and Wu, Yuntao and Klinck, Jeffrey and Michalopoulos, Panagiotis and Poulos, Zissis and Veneris, Andreas},
title = {{Modeling Loss-Versus-Rebalancing in Automated Market Makers via Continuous-Installment Options}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {6:1--6:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.6},
URN = {urn:nbn:de:0030-drops-247256},
doi = {10.4230/LIPIcs.AFT.2025.6},
annote = {Keywords: blockchain, decentralized finance, automated market makers, mathematical finance, perpetual options, continuous installments}
}
Document
Mechanism Design for Automated Market Makers
Abstract
Blockchains have popularized automated market makers (AMMs), applications that run on a blockchain, maintain a pool of crypto-assets, and execute trades with users governed by some pricing function. AMMs have also introduced a significant challenge known as the Miner Extractable Value (MEV). Specifically, miners who control the contents and sequencing of transactions in a block can extract value by front-running and back-running users' transactions, creating arbitrage opportunities that guarantee them risk-free returns. MEV not only harms ordinary users, but more critically, encourages miners to auction off favorable transaction placements to users and arbitragers. This has fostered a more centralized off-chain eco-system, departing from the decentralized equilibrium originally envisioned for the blockchain infrastructure layer.
In this paper, we consider how to design AMM mechanisms that eliminate MEV opportunities. Specifically, we propose a new AMM mechanism that processes all transactions contained within a block according to some pre-defined rules, ensuring that some constant potential function is maintained after processing the batch. We show that our new mechanism satisfies two tiers of guarantees. First, for legacy blockchains where each block is proposed by a single (possibly rotating) miner, we prove that our mechanism satisfies arbitrage resilience, i.e., a miner cannot gain risk-free profit. Second, for blockchains where the block proposal process is decentralized and offers sequencing-fairness, we prove a strictly stronger notion called strategy proofness - roughly speaking, we guarantee that any individual user’s best response is to follow the honest strategy.
Our results complement prior works on MEV resilience in the following senses. First, prior works have shown impossibilities to address MEV entirely at the consensus level. Our work demonstrates a new paradigm of mechanism design at the application (i.e., smart contract) layer to ensure provable guarantees of strategy proofness. Second, many works have attempted to augment the underlying consensus protocol with extra properties such as sequencing fairness. While most previous works heuristically argued why these extra properties help to mitigate MEV, our work demonstrates in a mathematically formal manner how to leverage such consensus-level properties to aid the design of strategy-proof mechanisms.
Cite as
T-H. Hubert Chan, Ke Wu, and Elaine Shi. Mechanism Design for Automated Market Makers. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 7:1-7:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{chan_et_al:LIPIcs.AFT.2025.7,
author = {Chan, T-H. Hubert and Wu, Ke and Shi, Elaine},
title = {{Mechanism Design for Automated Market Makers}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {7:1--7:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.7},
URN = {urn:nbn:de:0030-drops-247265},
doi = {10.4230/LIPIcs.AFT.2025.7},
annote = {Keywords: Mechanism design, game theory, strategy proof, blockchain}
}
Document
Strategic Analysis of Just-In-Time Liquidity Provision in Concentrated Liquidity Market Makers
Abstract
Liquidity providers (LPs) are essential figures in the operation of automated market makers (AMMs); in exchange for transaction fees, LPs lend the liquidity that allows AMMs to operate. While many prior works have studied the incentive structures of LPs in general, we currently lack a principled understanding of a special class of LPs known as Just-In-Time (JIT) LPs. These are strategic agents who momentarily supply liquidity for a single swap, in an attempt to extract disproportionately high fees relative to the remaining passive LPs. This paper provides the first formal, transaction-level model of JIT liquidity provision for a widespread class of AMMs known as Concentrated Liquidity Market Makers (CLMMs), as seen in Uniswap V3, for instance. We characterize the landscape of price impact and fee allocation in these systems, formulate and analyze a non-linear optimization problem faced by JIT LPs, and prove the existence of an optimal strategy. By fitting our optimal solution for JIT LPs to real-world CLMMs, we observe that in liquidity pools (particularly those with risky assets), there is a significant gap between observed and optimal JIT behavior. Existing JIT LPs often fail to account for price impact; doing so, we estimate they could increase earnings by up to 69% on average over small time windows. We also show that JIT liquidity, when deployed strategically, can improve market efficiency reducing slippage for traders, albeit at the cost of eroding passive LP profits by up to 44% per trade on average.
Cite as
Bruno Llacer Trotti, Weizhao Tang, Rachid El-Azouzi, Giulia Fanti, and Daniel Sadoc Menasché. Strategic Analysis of Just-In-Time Liquidity Provision in Concentrated Liquidity Market Makers. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 8:1-8:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{llacertrotti_et_al:LIPIcs.AFT.2025.8,
author = {Llacer Trotti, Bruno and Tang, Weizhao and El-Azouzi, Rachid and Fanti, Giulia and Menasch\'{e}, Daniel Sadoc},
title = {{Strategic Analysis of Just-In-Time Liquidity Provision in Concentrated Liquidity Market Makers}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {8:1--8:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.8},
URN = {urn:nbn:de:0030-drops-247278},
doi = {10.4230/LIPIcs.AFT.2025.8},
annote = {Keywords: Concentrated Liquidity Market Makers, Uniswap, Just-in-Time}
}
Document
Money in Motion: Micro‑Velocity and Usage of Ethereum’s Liquid Staking Tokens
Abstract
We introduce a micro-velocity framework for analysing the on-chain circulation of Lido’s liquid-staking tokens, stETH, and its wrapped ERC-20 form, wstETH. By reconstructing full transfer and share-based accounting histories, we compute address-level velocities and decompose them into behavioural components. Despite their growing importance, the micro-level monetary dynamics of LSTs remain largely unexplored. Our data reveal persistently high velocity for both tokens, reflecting intensive reuse within DeFi. Yet activity is highly concentrated: a small cohort of large addresses, likely institutional accounts, are responsible for most turnover, while the rest of the users remain largely passive. We also observe a gradual transition in user behavior, characterized by a shift toward wstETH, the non-rebasing variant of stETH. This shift appears to align with DeFi composability trends, as wstETH is more frequently deployed across protocols such as AAVE, Spark, Balancer, and SkyMoney.
To make the study fully reproducible, we release (i) an open-source pipeline that indexes event logs and historical contract state, and (ii) two public datasets containing every Transfer and TransferShares record for stETH and wstETH through 2024-11-08. This is the first large-scale empirical characterisation of liquid-staking token circulation. Our approach offers a scalable template for monitoring staking asset flows and provides new, open-access resources to the research community.
Cite as
Benjamin Kraner, Luca Pennella, Nicolò Vallarano, and Claudio J. Tessone. Money in Motion: Micro‑Velocity and Usage of Ethereum’s Liquid Staking Tokens. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 9:1-9:18, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{kraner_et_al:LIPIcs.AFT.2025.9,
author = {Kraner, Benjamin and Pennella, Luca and Vallarano, Nicol\`{o} and Tessone, Claudio J.},
title = {{Money in Motion: Micro‑Velocity and Usage of Ethereum’s Liquid Staking Tokens}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {9:1--9:18},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.9},
URN = {urn:nbn:de:0030-drops-247285},
doi = {10.4230/LIPIcs.AFT.2025.9},
annote = {Keywords: DeFi, Ethereum, Proof-of-Stake, Liquid Staking, Money Velocity, Inflation}
}
Document
Extended Abstract
Do Inflation Expectations Drive Cryptocurrency Investments? (Extended Abstract)
Abstract
This extended abstract summarizes the essence of [Cong, Ghosh, Li, Ruan, and Streltsov, 2024], which uses proprietary data from a predominant cryptocurrency exchange in India and the country’s Household Inflation Expectations Survey to document a significantly positive association between inflation expectations and individual cryptocurrency purchases. The authors find that the effect is concentrated in Bitcoin (BTC) and Tether (USDT) trading, and is robust after controlling for speculative demand captured by surveys of investors' expected cryptocurrency returns. They also find that higher inflation expectations are associated with more new cryptocurrency investors. These results have causal interpretations as confirmed by instrumental variables. The findings of [Cong, Ghosh, Li, Ruan, and Streltsov, 2024] provide direct evidence that households already adopt cryptocurrencies for inflation hedging, which in turn rationalizes their high adoption in developing countries without a globally dominant currency.
Cite as
Will Cong, Pulak Ghosh, Jiasun Li, Qihong Ruan, and Artem Streltsov. Do Inflation Expectations Drive Cryptocurrency Investments? (Extended Abstract). In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 10:1-10:3, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{cong_et_al:LIPIcs.AFT.2025.10,
author = {Cong, Will and Ghosh, Pulak and Li, Jiasun and Ruan, Qihong and Streltsov, Artem},
title = {{Do Inflation Expectations Drive Cryptocurrency Investments?}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {10:1--10:3},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.10},
URN = {urn:nbn:de:0030-drops-247292},
doi = {10.4230/LIPIcs.AFT.2025.10},
annote = {Keywords: Bitcoin, Cryptocurrency, Household Finance, Inflation, Stablecoin}
}
Document
Extended Abstract
Cryptocurrency Exchange Listings (Extended Abstract)
Abstract
This extended abstract summarizes the essence of [Li et al., 2025], which studies the listing decisions as well as listing performances on cryptocurrency exchanges, and investigates potential strategic incentives and their interactions with regulatory exposures. The authors first present a case study comparing cryptocurrency listings on the largest and more regulated U.S. exchange, Coinbase, and the largest but less regulated global exchange, Binance. They find that: Regarding listing performance, while cryptocurrency listings on both exchanges see significantly positive short-term returns, the more regulated Coinbase sees significantly higher listing returns than the less regulated Binance; Regarding listing choices, while both exchanges tend to list cryptocurrencies with more GitHub development activities, conflicts of interests arise when exchanges list cryptocurrencies that their venture capital arms have previously invested in. Specifically, the authors find the less regulated Binance being more likely to list its self-invested coins with inferior fundamentals, and the apparent agency friction does not seem to be corrected by market forces. To obtain external validity of the lessons learned from the top two exchanges, the authors further construct an exchange regulation index on a larger sample of 80 qualified exchanges, and confirm the relation between stricter exchange regulations and higher short-term listing returns, controlling for cryptocurrency and exchange attributes.
Cite as
Jiasun Li, Mei Luo, Muzhi Wang, and Zhe Wei. Cryptocurrency Exchange Listings (Extended Abstract). In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 11:1-11:2, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{li_et_al:LIPIcs.AFT.2025.11,
author = {Li, Jiasun and Luo, Mei and Wang, Muzhi and Wei, Zhe},
title = {{Cryptocurrency Exchange Listings}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {11:1--11:2},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.11},
URN = {urn:nbn:de:0030-drops-247305},
doi = {10.4230/LIPIcs.AFT.2025.11},
annote = {Keywords: cryptocurrency, exchanges, listing, regulation}
}
Document
How Much Public Randomness Do Modern Consensus Protocols Need?
Abstract
Modern blockchain-based consensus protocols aim for efficiency (i.e., low communication and round complexity) while maintaining security against adaptive adversaries. These goals are usually achieved using a public randomness beacon to select roles for each participant. We examine to what extent this randomness is necessary. Specifically, we provide tight bounds on the amount of entropy a Byzantine Agreement protocol must consume from a beacon in order to enjoy efficiency and adaptive security. We first establish that no consensus protocol can simultaneously be efficient, be adaptively secure, and use O(log n) bits of beacon entropy. We then show this bound is tight and, in fact, a trilemma by presenting three consensus protocols that achieve any two of these three properties.
Cite as
Joseph Bonneau, Benedikt Bünz, Miranda Christ, and Yuval Efron. How Much Public Randomness Do Modern Consensus Protocols Need?. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 12:1-12:19, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{bonneau_et_al:LIPIcs.AFT.2025.12,
author = {Bonneau, Joseph and B\"{u}nz, Benedikt and Christ, Miranda and Efron, Yuval},
title = {{How Much Public Randomness Do Modern Consensus Protocols Need?}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {12:1--12:19},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.12},
URN = {urn:nbn:de:0030-drops-247310},
doi = {10.4230/LIPIcs.AFT.2025.12},
annote = {Keywords: Consensus, Randomness Beacon}
}
Document
Composable Byzantine Agreements with Reorder Attacks
Abstract
Byzantine agreement (BA) is a foundational building block in distributed systems that has been extensively studied for decades. With the growing demand for protocol composition in practice, the security analysis of BA protocols under multi-instance executions has attracted increasing attention. However, most existing adversary models focus solely on party corruption and neglect important threats posed by adversarial manipulations of communication channels in the network. Through channel attacks, messages can be reordered across multiple executions and lead to violations of the protocol’s security guarantees, without the participating parties being corrupted.
In this work, we present the first adversary model that combines party corruption and channel attacks. Based on this model, we establish new security thresholds for Byzantine agreement under parallel and concurrent compositions, supported by complementary impossibility and possibility results that match each other to form a tight bound. For the impossibility result, we show that even authenticated Byzantine agreement protocols cannot be secure under parallel composition when n ≤ 3t or n ≤ 2c + 2t + 1, where t and c denote the number of corrupted parties and communication channels, respectively. For the possibility result, we prove the existence of secure protocols for unauthenticated Byzantine agreement under parallel and concurrent composition, when n > 3t and n > 2c+2t+1. More specifically, we provide a general black-box compiler that transforms any single-instance secure BA protocol into one that is secure under parallel executions, and we provide a non-black-box construction for concurrent compositions.
Cite as
Jing Chen, Jin Dong, Jichen Li, Xuanzhi Xia, and Wentao Zhou. Composable Byzantine Agreements with Reorder Attacks. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 13:1-13:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{chen_et_al:LIPIcs.AFT.2025.13,
author = {Chen, Jing and Dong, Jin and Li, Jichen and Xia, Xuanzhi and Zhou, Wentao},
title = {{Composable Byzantine Agreements with Reorder Attacks}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {13:1--13:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.13},
URN = {urn:nbn:de:0030-drops-247321},
doi = {10.4230/LIPIcs.AFT.2025.13},
annote = {Keywords: Byzantine agreement, protocol composition, channel reorder attack, security threshold}
}
Document
Optimistic Message Dissemination
Abstract
Message dissemination is a fundamental building block in distributed systems and guarantees that any message sent eventually reaches all parties. State of the art provably secure protocols for disseminating messages have a per-party communication complexity that is linear in the inverse of the fraction of parties that are guaranteed to be honest in the worst case. Unfortunately, this per-party communication complexity arises even in cases where the actual fraction of parties that behave honestly is close to 1. In this paper, we propose an optimistic message dissemination protocol that adopts to the actual conditions in which it is deployed, with optimal worst-case per-party communication complexity. Our protocol cuts the complexity of prior provably secure protocols for 49% worst-case corruption almost in half under optimistic conditions and allows practitioners to combine efficient heuristics with secure fallback mechanisms.
Cite as
Chen-Da Liu-Zhang, Christian Matt, and Søren Eller Thomsen. Optimistic Message Dissemination. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 14:1-14:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{liuzhang_et_al:LIPIcs.AFT.2025.14,
author = {Liu-Zhang, Chen-Da and Matt, Christian and Thomsen, S{\o}ren Eller},
title = {{Optimistic Message Dissemination}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {14:1--14:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.14},
URN = {urn:nbn:de:0030-drops-247332},
doi = {10.4230/LIPIcs.AFT.2025.14},
annote = {Keywords: flooding, message dissemination, optimistic}
}
Document
Beyond Optimal Fault-Tolerance
Abstract
One of the most basic properties of a consensus protocol is its fault-tolerance - the maximum fraction of faulty participants that the protocol can tolerate without losing fundamental guarantees such as safety and liveness. Because of its importance, the optimal fault-tolerance achievable by any protocol has been characterized in a wide range of settings. For example, for state machine replication (SMR) protocols operating in the partially synchronous setting, it is possible to simultaneously guarantee consistency against α-bounded adversaries (i.e., adversaries that control less than an α fraction of the participants) and liveness against β-bounded adversaries if and only if α + 2β ≤ 1.
This paper characterizes to what extent "better-than-optimal" fault-tolerance guarantees are possible for SMR protocols when the standard consistency requirement is relaxed to allow a bounded number r of consistency violations, each potentially leading to the rollback of recently finalized transactions. We prove that bounded rollback is impossible without additional timing assumptions and investigate protocols that tolerate and recover from consistency violations whenever message delays around the time of an attack are bounded by a parameter Δ^* (which may be arbitrarily larger than the parameter Δ that bounds post-GST message delays in the partially synchronous model). Here, a protocol’s fault-tolerance can be a non-constant function of r, and we prove, for each r, matching upper and lower bounds on the optimal "recoverable fault-tolerance" achievable by any SMR protocol. For example, for protocols that guarantee liveness against 1/3-bounded adversaries in the partially synchronous setting, a 5/9-bounded adversary can always cause one consistency violation but not two, and a 2/3-bounded adversary can always cause two consistency violations but not three. Our positive results are achieved through a generic "recovery procedure" that can be grafted on to any accountable SMR protocol and restores consistency following a violation while rolling back only transactions that were finalized in the previous 2Δ^* timesteps.
Cite as
Andrew Lewis-Pye and Tim Roughgarden. Beyond Optimal Fault-Tolerance. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 15:1-15:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{lewispye_et_al:LIPIcs.AFT.2025.15,
author = {Lewis-Pye, Andrew and Roughgarden, Tim},
title = {{Beyond Optimal Fault-Tolerance}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {15:1--15:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.15},
URN = {urn:nbn:de:0030-drops-247341},
doi = {10.4230/LIPIcs.AFT.2025.15},
annote = {Keywords: Distributed computing, consensus, recovery}
}
Document
Nakamoto Consensus from Multiple Resources
Abstract
The blocks in the Bitcoin blockchain "record" the amount of work W that went into creating them through proofs of work. When honest parties control a majority of the work, consensus is achieved by picking the chain with the highest recorded weight. Resources other than work have been considered to secure such longest-chain blockchains. In Chia, blocks record the amount of disk-space S (via a proof of space) and sequential computational steps V (through a VDF).
In this paper, we ask what weight functions Γ(S,V,W) (that assign a weight to a block as a function of the recorded space, speed, and work) are secure in the sense that whenever the weight of the resources controlled by honest parties is larger than the weight of adversarial parties, the blockchain is secure against private double-spending attacks.
We completely classify such functions in an idealized "continuous" model: Γ(S,V,W) is secure against private double-spending attacks if and only if it is homogeneous of degree one in the "timed" resources V and W, i.e., αΓ(S,V,W) = Γ(S,α V, α W). This includes the Bitcoin rule Γ(S,V,W) = W and the Chia rule Γ(S,V,W) = S ⋅ V. In a more realistic model where blocks are created at discrete time-points, one additionally needs some mild assumptions on the dependency on S (basically, the weight should not grow too much if S is slightly increased, say linear as in Chia).
Our classification is more general and allows various instantiations of the same resource. It provides a powerful tool for designing new longest-chain blockchains. E.g., consider combining different PoWs to counter centralization, say the Bitcoin PoW W₁ and a memory-hard PoW W₂. Previous work suggested to use W₁+W₂ as weight. Our results show that using e.g., √{W₁}⋅ √{W₂} or min{W₁,W₂} are also secure, and we argue that in practice these are much better choices.
Cite as
Mirza Ahad Baig, Christoph U. Günther, and Krzysztof Pietrzak. Nakamoto Consensus from Multiple Resources. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 16:1-16:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{baig_et_al:LIPIcs.AFT.2025.16,
author = {Baig, Mirza Ahad and G\"{u}nther, Christoph U. and Pietrzak, Krzysztof},
title = {{Nakamoto Consensus from Multiple Resources}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {16:1--16:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.16},
URN = {urn:nbn:de:0030-drops-247353},
doi = {10.4230/LIPIcs.AFT.2025.16},
annote = {Keywords: Nakamoto Consensus, Heaviest-chain Rule, Resource Theory}
}
Document
Fully-Fluctuating Participation in Sleepy Consensus
Abstract
Proof-of-work allows Bitcoin to boast security amidst arbitrary fluctuations in participation of miners throughout time, so long as, at any point in time, a majority of hash power is honest. In recent years, however, the pendulum has shifted in favor of proof-of-stake-based consensus protocols. There, the sleepy model is the most prominent model for handling fluctuating participation of nodes. However, to date, no protocol in the sleepy model rivals Bitcoin in its robustness to drastic fluctuations in participation levels, with state-of-the-art protocols making various restrictive assumptions. In this work, we present a new adversary model, called external adversary. Intuitively, in our model, corrupt nodes do not divulge information about their secret keys. In this model, we show that protocols in the sleepy model can meaningfully claim to remain secure against fully fluctuating participation, without compromising efficiency or corruption resilience. Our adversary model is quite natural, and arguably naturally captures the process via which malicious behavior arises in protocols, as opposed to traditional worst-case modeling. On top of which, the model is also theoretically appealing, circumventing a barrier established in a recent work of Malkhi, Momose, and Ren.
Cite as
Yuval Efron, Joachim Neu, and Toniann Pitassi. Fully-Fluctuating Participation in Sleepy Consensus. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 17:1-17:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{efron_et_al:LIPIcs.AFT.2025.17,
author = {Efron, Yuval and Neu, Joachim and Pitassi, Toniann},
title = {{Fully-Fluctuating Participation in Sleepy Consensus}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {17:1--17:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.17},
URN = {urn:nbn:de:0030-drops-247362},
doi = {10.4230/LIPIcs.AFT.2025.17},
annote = {Keywords: Sleepy Consensus, fully-fluctuating dynamic Participation}
}
Document
From Permissioned to Proof-of-Stake Consensus
Abstract
This paper presents the first generic compiler that transforms any permissioned consensus protocol into a proof-of-stake permissionless consensus protocol. For each of the following properties, if the initial permissioned protocol satisfies that property in the partially synchronous setting, the consequent proof-of-stake protocol also satisfies that property in the partially synchronous and quasi-permissionless setting (with the same fault-tolerance): consistency; liveness; optimistic responsiveness; every composable log-specific property; and message complexity of a given order. Moreover, our transformation ensures that the output protocol satisfies accountability (identifying culprits in the event of a consistency violation), whether or not the original permissioned protocol satisfied it.
Cite as
Jovan Komatovic, Andrew Lewis-Pye, Joachim Neu, Tim Roughgarden, and Ertem Nusret Tas. From Permissioned to Proof-of-Stake Consensus. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 18:1-18:26, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{komatovic_et_al:LIPIcs.AFT.2025.18,
author = {Komatovic, Jovan and Lewis-Pye, Andrew and Neu, Joachim and Roughgarden, Tim and Tas, Ertem Nusret},
title = {{From Permissioned to Proof-of-Stake Consensus}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {18:1--18:26},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.18},
URN = {urn:nbn:de:0030-drops-247373},
doi = {10.4230/LIPIcs.AFT.2025.18},
annote = {Keywords: Permissioned Consensus, Proof-of-Stake, generic Compiler, Blockchain}
}
Document
Two-Tier Black-Box Blockchains and Application to Instant Layer-1 Payments
Abstract
Common blockchain protocols are monolithic, i.e., their security relies on a single assumption, e.g., honest majority of hashing power (Bitcoin) or stake (Cardano, Algorand, Ethereum). In contrast, so-called optimistic approaches (Thunderella, Meshcash) rely on a combination of assumptions to achieve faster transaction liveness.
We revisit, redesign, and augment the optimistic paradigm to a tiered approach. Our design assumes a primary (Tier 1) and a secondary (Tier 2, also referred to as fallback) blockchain, and achieves full security also in a tiered fashion: If the assumption underpinning the primary chain holds, then we guarantee safety, liveness and censorship resistance, irrespectively of the status of the fallback chain. And even if the primary assumption fails, all security properties are still satisfied (albeit with a temporary slow down) provided the fallback assumption holds. To our knowledge, no existing optimistic or tiered approach preserves both safety and liveness when any one of its underlying blockchain (assumptions) fails. The above is achieved by a new detection-and-recovery mechanism that links the two blockchains, so that any violation of safety, liveness, or censorship resistance on the (faster) primary blockchain is temporary - it is swiftly detected and recovered on the secondary chain - and thus cannot result in a persistent fork or halt of the blockchain ledger.
We instantiate the above paradigm using a primary chain based on proof of reputation (PoR) and a fallback chain based on proof of stake (PoS). Our construction uses the PoR and PoS blockchains in a mostly black-box manner - where rather than assuming a concrete construction we distil abstract properties on the two blockchains that are sufficient for applying our tiered methodology. In fact, choosing reputation as the resource of the primary chain opens the door to an incentive mechanism - which we devise and analyze - that tokenizes reputation in order to deter cheating and boost participation (on both the primary/PoR and the fallback/PoS blockchain). As we demonstrate, such tokenization in combination with interpreting reputation as a built-in system-wide credit score, allows for embedding in our two-tiered methodology a novel mechanism which provides collateral-free, multi-use payment-channel-like functionality where payments can be instantly confirmed.
Cite as
Michele Ciampi, Yun Lu, Rafail Ostrovsky, and Vassilis Zikas. Two-Tier Black-Box Blockchains and Application to Instant Layer-1 Payments. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 19:1-19:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{ciampi_et_al:LIPIcs.AFT.2025.19,
author = {Ciampi, Michele and Lu, Yun and Ostrovsky, Rafail and Zikas, Vassilis},
title = {{Two-Tier Black-Box Blockchains and Application to Instant Layer-1 Payments}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {19:1--19:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.19},
URN = {urn:nbn:de:0030-drops-247380},
doi = {10.4230/LIPIcs.AFT.2025.19},
annote = {Keywords: Fault tolerant blockchain, instantly confirmed payments}
}
Document
Selfish Mining Under General Stochastic Rewards
Abstract
Selfish miners selectively withhold blocks to earn disproportionately high revenue. The vast majority of the selfish mining literature focuses exclusively on block rewards. [Carlsten et al., 2016] is a notable exception, observing that similar strategic behavior is profitable in a zero-block-reward regime (the endgame for Bitcoin’s quadrennial halving schedule) if miners are compensated with transaction fees alone. Neither model fully captures miner incentives today. The block reward remains 3.125 BTC, yet some blocks yield significantly higher revenue. For example, congestion during the launch of the Babylon protocol in August 2024 caused transaction fees to spike from 0.14 BTC to 9.52 BTC, a 68× increase in fees within two blocks.
Our results are both practical and theoretical. Of practical interest, we study selfish mining profitability under a combined reward function that more accurately models miner incentives. This analysis enables us to make quantitative claims about protocol risk (e.g., the mining power at which a selfish strategy becomes profitable is reduced by 22% when optimizing over the combined reward function versus block rewards alone) and qualitative observations (e.g., a miner considering both block rewards and transaction fees will mine more or less aggressively respectively than if they cared about either alone). These practical results follow from our novel model and methodology, which constitute our theoretical contributions. We model general, time-accruing stochastic rewards in the Nakamoto Consensus Game, which requires explicit treatment of difficult adjustment and randomness; we characterize reward function structure through a set of properties (e.g., that rewards accrue only as a function of time since the parent block). We present a new methodology to analytically calculate expected selfish miner rewards under a broad class of stochastic reward functions and validate our method numerically by comparing it with the existing literature and simulating the combined reward sources directly.
Cite as
Maryam Bahrani, Michael Neuder, and S. Matthew Weinberg. Selfish Mining Under General Stochastic Rewards. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 20:1-20:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{bahrani_et_al:LIPIcs.AFT.2025.20,
author = {Bahrani, Maryam and Neuder, Michael and Weinberg, S. Matthew},
title = {{Selfish Mining Under General Stochastic Rewards}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {20:1--20:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.20},
URN = {urn:nbn:de:0030-drops-247396},
doi = {10.4230/LIPIcs.AFT.2025.20},
annote = {Keywords: Proof-of-Work, Selfish Mining, MEV}
}
Document
Pool Formation in Oceanic Games: Shapley Value and Proportional Sharing
Abstract
We study a game-theoretic model for pool formation in Proof of Stake blockchain protocols. In such systems, stakeholders can form pools as a means of obtaining regular rewards from participation in ledger maintenance, with the power of each pool being dependent on its collective stake. The question we are interested in is the design of mechanisms, i.e., "reward sharing schemes," that suitably split rewards among pool members and achieve favorable properties in the resulting pool configuration. With this in mind, we initiate a non-cooperative game-theoretic analysis of the well known Shapley value scheme from cooperative game theory into the context of blockchains. In particular, we focus on the oceanic model of games, proposed by Milnor and Shapley (1978), which is suitable for populations where a small set of large players coexists with a big mass of rather small, negligible players. This provides an appropriate level of abstraction for pool formation processes that occur among the stakeholders of a blockchain. We provide comparisons between the Shapley mechanism and the more standard proportional scheme, in terms of attained decentralization, via a Price of Stability analysis and in terms of susceptibility to Sybil attacks, i.e., the strategic splitting of a players' stake with the intention of participating in multiple pools for increased profit. Interestingly, while the widely deployed proportional scheme appears to have certain advantages, the Shapley value scheme, which rewards higher the most pivotal players, emerges as a competitive alternative, by being able to bypass some of the downsides of proportional sharing in terms of Sybil attack susceptibility, while also not being far from optimal guarantees w.r.t. decentralization. Finally, we also complement our study with some variations of proportional sharing, where the profit is split in proportion to a superadditive or a subadditive function of the stake, showing that our results for the Shapley value scheme are maintained in comparison to these functions as well.
Cite as
Aggelos Kiayias, Elias Koutsoupias, Evangelos Markakis, and Panagiotis Tsamopoulos. Pool Formation in Oceanic Games: Shapley Value and Proportional Sharing. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 21:1-21:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{kiayias_et_al:LIPIcs.AFT.2025.21,
author = {Kiayias, Aggelos and Koutsoupias, Elias and Markakis, Evangelos and Tsamopoulos, Panagiotis},
title = {{Pool Formation in Oceanic Games: Shapley Value and Proportional Sharing}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {21:1--21:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.21},
URN = {urn:nbn:de:0030-drops-247409},
doi = {10.4230/LIPIcs.AFT.2025.21},
annote = {Keywords: Shapley value, Nash equilibria, Price of Stability, Reward sharing schemes, Proof of Stake blockchains}
}
Document
Single-Token vs Two-Token Blockchain Tokenomics
Abstract
We study long-term equilibria that arise in the token monetary policy, or tokenomics, design of proof-of-stake (PoS) blockchain systems that engage utility maximizing users and validators. Validators are system maintainers who get rewarded with tokens for performing the work necessary for the system to function properly, while users compete and pay with such tokens for getting a desired portion of the system service.
We study how the system service provision and suitable rewards schemes together can lead to equilibria with the following desirable characteristics (1) viability: the system keeps parties engaged, (2) decentralization and skin-in-the-game: multiple sufficiently invested validators are participating, (3) stability: the price path of the underlying token used to transact with the system does not change widely over time, and (4) feasibility: the mechanism is easy to implement as a smart contract, e.g., it does not require a fiat reserve on-chain to perform token buybacks or to perform bookkeeping of exponentially growing token holdings.
Our analysis enables us to put forward a novel generic mechanism for blockchain monetary policy that we call quantitative rewarding (QR). We investigate how to implement QR in single-token and two-token proof of stake (PoS) blockchain systems. The latter are systems that utilize one token for the users to pay the transaction fees and a different token for the validators to participate in the PoS protocol and get rewarded. Our approach demonstrates a concrete advantage of the two-token setting in terms of the ability of the QR mechanism to be realized effectively and provide good equilibria. Our analysis also reveals an inherent limitation of the single token setting in terms of implementing an effective blockchain monetary policy - a distinction that is, to the best of our knowledge, highlighted for the first time.
Cite as
Aggelos Kiayias, Philip Lazos, and Paolo Penna. Single-Token vs Two-Token Blockchain Tokenomics. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 22:1-22:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{kiayias_et_al:LIPIcs.AFT.2025.22,
author = {Kiayias, Aggelos and Lazos, Philip and Penna, Paolo},
title = {{Single-Token vs Two-Token Blockchain Tokenomics}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {22:1--22:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.22},
URN = {urn:nbn:de:0030-drops-247412},
doi = {10.4230/LIPIcs.AFT.2025.22},
annote = {Keywords: Blockchain, tokenomics, buyback, equilibria, price path, stable price, discounted game, dual-token, proof-of-stake, validator}
}
Document
Transaction Fee Market Design for Parallel Execution
Abstract
Given the low throughput of blockchains like Bitcoin and Ethereum, scalability - the ability to process an increasing number of transactions - has become a central focus of blockchain research. One promising approach is the parallelization of transaction execution across multiple threads. However, achieving efficient parallelization requires a redesign of the incentive structure within the fee market. Currently, the fee market does not differentiate between transactions that access multiple high-demand storage keys (i.e., unique identifiers for individual data entries) versus a single low-demand one, as long as they require the same computational effort. Addressing this discrepancy is crucial for enabling more effective parallel execution.
In this work, we aim to bridge the gap between the current fee market and the need for parallel execution by exploring alternative fee market designs. To this end, we propose a framework consisting of two key components: a Gas Computation Mechanism (GCM), which quantifies the load a transaction places on the network in terms of parallelization and computation, measured in units of gas, and a Transaction Fee Mechanism (TFM), which assigns a price to each unit of gas. We additionally introduce a set of desirable properties for a GCM, propose several candidate mechanisms, and evaluate them against these criteria. Our analysis highlights two strong candidates: the weighted area GCM, which integrates smoothly with existing TFMs such as EIP‑1559 and satisfies a broad subset of the outlined properties, and the time-proportional makespan GCM, which assigns gas costs based on the context of the entire block’s schedule and, through this dependence on the overall execution outcome, captures the dynamics of parallel execution more accurately.
Cite as
Bahar Acilan, Andrei Constantinescu, Lioba Heimbach, and Roger Wattenhofer. Transaction Fee Market Design for Parallel Execution. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 23:1-23:25, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{acilan_et_al:LIPIcs.AFT.2025.23,
author = {Acilan, Bahar and Constantinescu, Andrei and Heimbach, Lioba and Wattenhofer, Roger},
title = {{Transaction Fee Market Design for Parallel Execution}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {23:1--23:25},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.23},
URN = {urn:nbn:de:0030-drops-247426},
doi = {10.4230/LIPIcs.AFT.2025.23},
annote = {Keywords: blockchain, transaction fee mechanism, parallel execution}
}
Document
Multidimensional Blockchain Fees Are (Essentially) Optimal
Abstract
In this paper we show that, using only mild assumptions, dynamic multidimensional blockchain fee markets have strong performance guarantees, even against worst-case adversaries. In particular, we show that the average welfare gap between the following two scenarios is at most O(1/√T), where T is the length of the time horizon considered. In the first scenario, the designer knows all future actions by users and is allowed to fix the optimal prices of resources ahead of time, based on the designer’s oracular knowledge of those actions. In the second, the prices are updated by a very simple algorithm that does not have this oracular knowledge, special cases of which are EIP-4844 and EIP-1559, both fee mechanisms used by the Ethereum blockchain. Roughly speaking, this means that, on average, over a reasonable timescale, there is no difference in welfare between "correctly" fixing the prices, with oracular knowledge of the future, when compared to the proposed algorithm. We show a matching lower bound of Ω(1/√T) for any implementable algorithm and also separately consider the case where the adversary is known to be stochastic.
Cite as
Guillermo Angeris, Theo Diamandis, and Ciamac Moallemi. Multidimensional Blockchain Fees Are (Essentially) Optimal. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 24:1-24:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{angeris_et_al:LIPIcs.AFT.2025.24,
author = {Angeris, Guillermo and Diamandis, Theo and Moallemi, Ciamac},
title = {{Multidimensional Blockchain Fees Are (Essentially) Optimal}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {24:1--24:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.24},
URN = {urn:nbn:de:0030-drops-247433},
doi = {10.4230/LIPIcs.AFT.2025.24},
annote = {Keywords: Blockchains, transaction fees, online optimization, convex optimization}
}
Document
The Exchange Problem
Abstract
Auctions are widely used in exchanges to match buy and sell requests. Once the buyers and sellers place their requests, the exchange determines how these requests are to be matched. The two most popular objectives used while determining the matching are maximizing volume with dynamic pricing and maximizing volume at a uniform price. In this work, we study the algorithmic complexity of the problems arising from these matching tasks.
For dynamic-price matching, we establish a lower bound of Ω(n log n) on the running time, thereby proving that the currently best-known O(n log n) algorithm is time-optimal. In contrast, for uniform-price matching, we present a linear-time algorithm, improving upon previous methods that require O(n log n) time to match n requests.
Cite as
Mohit Garg and Suneel Sarswat. The Exchange Problem. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 25:1-25:19, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{garg_et_al:LIPIcs.AFT.2025.25,
author = {Garg, Mohit and Sarswat, Suneel},
title = {{The Exchange Problem}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {25:1--25:19},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.25},
URN = {urn:nbn:de:0030-drops-247449},
doi = {10.4230/LIPIcs.AFT.2025.25},
annote = {Keywords: Exchanges, Double Auctions, Matching Algorithms, Element Distinctness, Time Complexity}
}
Document
Measuring CEX-DEX Extracted Value and Searcher Profitability: The Darkest of the MEV Dark Forest
Abstract
This paper provides a comprehensive empirical analysis of the economics and dynamics behind arbitrages between centralized and decentralized exchanges (CEX-DEX) on Ethereum. We refine heuristics to identify arbitrage transactions from on-chain data and introduce a robust empirical framework to estimate arbitrage revenue without knowing traders' actual behaviors on CEX. Leveraging an extensive dataset spanning 19 months from August 2023 to March 2025, we estimate a total of 233.8M USD extracted by 19 major CEX-DEX searchers from 7,203,560 identified CEX-DEX arbitrages. Our analysis reveals increasing centralization trends as three searchers captured three-quarters of both volume and extracted value. We also demonstrate that searchers' profitability is tied to their integration level with block builders and uncover exclusive searcher-builder relationships and their market impact. Finally, we correct the previously underestimated profitability of block builders who vertically integrate with a searcher. These insights illuminate the darkest corner of the MEV landscape and highlight the critical implications for Ethereum’s decentralization.
Cite as
Fei Wu, Danning Sui, Thomas Thiery, and Mallesh Pai. Measuring CEX-DEX Extracted Value and Searcher Profitability: The Darkest of the MEV Dark Forest. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 26:1-26:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{wu_et_al:LIPIcs.AFT.2025.26,
author = {Wu, Fei and Sui, Danning and Thiery, Thomas and Pai, Mallesh},
title = {{Measuring CEX-DEX Extracted Value and Searcher Profitability: The Darkest of the MEV Dark Forest}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {26:1--26:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.26},
URN = {urn:nbn:de:0030-drops-247450},
doi = {10.4230/LIPIcs.AFT.2025.26},
annote = {Keywords: Decentralized Finance, Maximal Extractable Value, CEX-DEX arbitrages}
}
Document
Unravelling the Probabilistic Forest: Arbitrage in Prediction Markets
Abstract
Polymarket is a prediction market platform where users can speculate on future events by trading shares tied to specific outcomes, known as conditions. Each market on Polymarket is associated with a set of one or more such conditions. To ensure proper market resolution, the condition set must be exhaustive - collectively accounting for all possible outcomes - and mutually exclusive - only one condition may resolve as true. Thus, the collective prices (probabilities) of all related outcomes (whether in a condition or market) should be $1, representing a combined probability of 1 of any outcome. Despite this design, Polymarket exhibits cases where dependent assets are mispriced, allowing for purchasing (or selling) a certain outcome for less than (or more than) $1, guaranteeing profit. This phenomenon, known as arbitrage, could enable sophisticated participants to exploit such inconsistencies.
In this paper, we conduct an empirical arbitrage analysis on Polymarket data to answer three key questions: (Q1) What conditions give rise to arbitrage? (Q2) Does arbitrage actually occur on Polymarket?, and (Q3) Has anyone exploited these opportunities? A major challenge in analyzing arbitrage between related markets lies in the scalability of comparisons across a large number of markets and conditions, with a naive analysis requiring O(2^{n+m}) comparisons. To overcome this, we employ a heuristic-driven reduction strategy based on timeliness, topical similarity, and combinatorial relationships, further validated by expert input.
Our study reveals two distinct forms of arbitrage on Polymarket: Market Rebalancing Arbitrage, which occurs within a single market or condition (intra-market), and Combinatorial Arbitrage, which spans across multiple markets (inter-market). We use on-chain historical order book data to analyze when these types of arbitrage opportunities have existed, and when they have been executed by users. We find a realized estimate of 40 million USD of profit extracted across both types of arbitrage during our measurement period.
Cite as
Oriol Saguillo, Vahid Ghafouri, Lucianna Kiffer, and Guillermo Suarez-Tangil. Unravelling the Probabilistic Forest: Arbitrage in Prediction Markets. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 27:1-27:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{saguillo_et_al:LIPIcs.AFT.2025.27,
author = {Saguillo, Oriol and Ghafouri, Vahid and Kiffer, Lucianna and Suarez-Tangil, Guillermo},
title = {{Unravelling the Probabilistic Forest: Arbitrage in Prediction Markets}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {27:1--27:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.27},
URN = {urn:nbn:de:0030-drops-247468},
doi = {10.4230/LIPIcs.AFT.2025.27},
annote = {Keywords: Prediction Markets, Maximal Extractable Value, Large Language Models}
}
Document
Optimistic MEV in Ethereum Layer 2s: Why Blockspace Is Always in Demand
Abstract
Layer 2 rollups are rapidly absorbing DeFi activity, securing over $40 billion and accounting for nearly half of Ethereum’s DEX volume by Q1 2025, yet their MEV dynamics remain understudied. We address this gap by defining and quantifying optimistic MEV, a form of speculative, on-chain MEV whose detection and execution logic reside largely on-chain in smart contracts. As a result of their speculative nature and lack of off-chain opportunity verification, optimistic MEV transactions frequently decide not to execute any trades.
In this work, we focus on cyclic arbitrage, which we find is predominantly executed as optimistic MEV on Layer 2s. Using our multi-stage identification pipeline on Arbitrum, Base, and Optimism, we show that in Q1 2025, transactions from cyclic arbitrage contracts account for over 50% of on-chain gas on Base and Optimism and 7% on Arbitrum, driven mainly by "interaction" probes (on-chain computations searching for arbitrage). This speculative probing indicates that cyclic arbitrage on Layer 2s is predominantly executed as optimistic MEV and contributes to generally keeping blocks on Base and Optimism persistently full. Despite consuming over half of on-chain gas, these optimistic MEV transactions pay less than one quarter of total gas fees. Cross-network comparison reveals divergent success rates, differing patterns of code reuse, and sensitivity to varying sequencer ordering and block production times. Finally, OLS regressions link optimistic MEV trade count to ETH volatility, retail trading activity, and DEX aggregator usage. Together, these findings show that optimistic MEV has become a major source of persistent spam-like transaction activity on Layer 2s, dominating blockspace with low-value probes and reshaping the composition of on-chain activity.
Cite as
Ozan Solmaz, Lioba Heimbach, Yann Vonlanthen, and Roger Wattenhofer. Optimistic MEV in Ethereum Layer 2s: Why Blockspace Is Always in Demand. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 28:1-28:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{solmaz_et_al:LIPIcs.AFT.2025.28,
author = {Solmaz, Ozan and Heimbach, Lioba and Vonlanthen, Yann and Wattenhofer, Roger},
title = {{Optimistic MEV in Ethereum Layer 2s: Why Blockspace Is Always in Demand}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {28:1--28:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.28},
URN = {urn:nbn:de:0030-drops-247479},
doi = {10.4230/LIPIcs.AFT.2025.28},
annote = {Keywords: blockchain, MEV, Layer 2, Ethereum}
}
Document
Efficient Parallel Execution of Blockchain Transactions Leveraging Conflict Specifications
Abstract
Parallel execution of smart contract transactions in large multicore architectures is critical for higher efficiency and improved throughput. The main bottleneck for maximizing the throughput of a node through parallel execution is transaction conflict resolution: when two transactions interact with the same data, like an account balance, their order matters. Imagine one transaction sends tokens from account A to account B, and another tries to send tokens from account B to account C. If the second transaction happens before the first one, the token balance in account B might be wrong, causing the entire system to break. Conflicts like these must be managed carefully, or you end up with an inconsistent, unusable blockchain state.
Traditional software transactional memory (STM) has been identified as a possible abstraction for the concurrent execution of transactions within a block, with Block-STM pioneering its application for efficient blockchain transaction processing on multicore validator nodes. This paper presents a parallel execution methodology that leverages conflict specification information of the transactions for block transactional memory (BTM) algorithms. Our experimental analysis, conducted over synthetic transactional workloads and real-world blocks, demonstrates that BTMs leveraging conflict specifications outperform their plain counterparts on both EVM and MoveVM. Our proposed BTM implementations achieve up to 1.75× speedup over sequential execution and outperform the state-of-the-art Parallel-EVM (PEVM) execution by up to 1.33× across synthetic workloads.
Cite as
Parwat Singh Anjana, Matin Amini, Rohit Kapoor, Rahul Parmar, Raghavendra Ramesh, Srivatsan Ravi, and Joshua Tobkin. Efficient Parallel Execution of Blockchain Transactions Leveraging Conflict Specifications. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 29:1-29:26, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{anjana_et_al:LIPIcs.AFT.2025.29,
author = {Anjana, Parwat Singh and Amini, Matin and Kapoor, Rohit and Parmar, Rahul and Ramesh, Raghavendra and Ravi, Srivatsan and Tobkin, Joshua},
title = {{Efficient Parallel Execution of Blockchain Transactions Leveraging Conflict Specifications}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {29:1--29:26},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.29},
URN = {urn:nbn:de:0030-drops-247485},
doi = {10.4230/LIPIcs.AFT.2025.29},
annote = {Keywords: Blockchain, Smart Contract, Parallel Execution, Conflict Specifications}
}
Document
Ticket to Ride: Locally Steered Source Routing for the Lightning Network
Abstract
Route discovery in the Lightning Network is challenging because senders observe only static channel capacities while real-time balances remain hidden. Existing locally steered schemes such as SpeedyMurmurs protect path privacy but depend on global landmark trees whose maintenance traffic and detours inflate latency and overhead.
We present Ticket to Ride (T2R), a locally steered source-routing framework that encodes the set of channels a payment may traverse into a compact ticket - an approximate-membership filter keyed with per-hop Diffie–Hellman secrets. Each relay learns only whether its own outgoing edges are permitted, yielding the same incident-edge privacy as SpeedyMurmurs while eliminating the need to build and maintain global landmark trees or any other shared routing state.
Extensive simulations on real snapshots - incorporating churn, silent shutdowns, and random channel saturation - show that T2R boosts end-to-end success by up to 9% and cuts median delay by 1.6× relative to SpeedyMurmurs, all with < 1 kB total overhead and no extra handshakes. Because tickets are processed hop-by-hop and can be prefixed by a trampoline, T2R remains lightweight enough for resource-constrained IoT nodes.
Cite as
Sajjad Alizadeh and Majid Khabbazian. Ticket to Ride: Locally Steered Source Routing for the Lightning Network. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 30:1-30:21, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{alizadeh_et_al:LIPIcs.AFT.2025.30,
author = {Alizadeh, Sajjad and Khabbazian, Majid},
title = {{Ticket to Ride: Locally Steered Source Routing for the Lightning Network}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {30:1--30:21},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.30},
URN = {urn:nbn:de:0030-drops-247490},
doi = {10.4230/LIPIcs.AFT.2025.30},
annote = {Keywords: Lightning Network, Source Routing, Approximate Membership Filters}
}
Document
Trustless Bridges via Random Sampling Light Clients
Abstract
The increasing number of blockchain projects introduced annually has led to a pressing need for secure and efficient interoperability solutions. Currently, the lack of such solutions forces end-users to rely on centralized intermediaries, contradicting the core principle of decentralization and trust minimization in blockchain technology. We propose a decentralized and efficient interoperability solution (aka Bridge Protocol) that operates without additional trust assumptions, relying solely on the Byzantine Fault Tolerance (BFT) properties of the two chains being connected. In particular, relayers (actors that exchange messages between networks) are permissionless and decentralized, hence eliminating any single point of failure. We introduce Random Sampling, a novel technique for on-chain light clients to efficiently follow the history of PoS blockchains by reducing the signature verifications required. Here, the randomness is drawn on-chain, for example, using Ethereum’s RANDAO. We analyze the security of the bridge from a crypto- economic perspective and provide a framework to derive the security parameters. This includes handling subtle concurrency issues and randomness bias in strawman designs. While the protocol is applicable to various PoS chains, we demonstrate the protocol’s practical feasibility by showcasing an instantiated bridge between Polkadot and Ethereum (currently deployed), and discuss some practical security challenges. Furthermore, we evaluate the efficiency of our on-chain light client verifier (implemented as an Ethereum smart contract) against SNARK-based approaches, demonstrating significantly lower gas costs for signature verification - even for validator sets up to 10⁶.
Cite as
Bhargav Nagaraja Bhatt, Fatemeh Shirazi, and Alistair Stewart. Trustless Bridges via Random Sampling Light Clients. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 31:1-31:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{bhatt_et_al:LIPIcs.AFT.2025.31,
author = {Bhatt, Bhargav Nagaraja and Shirazi, Fatemeh and Stewart, Alistair},
title = {{Trustless Bridges via Random Sampling Light Clients}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {31:1--31:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.31},
URN = {urn:nbn:de:0030-drops-247503},
doi = {10.4230/LIPIcs.AFT.2025.31},
annote = {Keywords: PoS Blockchains, Trustless Bridges, Light Clients, Decentralised Relayers, RANDAO Bias}
}
Document
4-Swap: Achieving Grief-Free and Bribery-Safe Atomic Swaps Using Four Transactions
Abstract
Cross-chain asset exchange is crucial for blockchain interoperability. Existing solutions rely on trusted third parties and risk asset loss, or use decentralized alternatives like atomic swaps, which suffer from grief attacks. Griefing occurs when a party prematurely exits, locking the counterparty’s assets until a timelock expires. Hedged Atomic Swaps mitigate griefing by introducing a penalty premium; however, they increase the number of transactions from four (as in Tier Nolan’s swap) to six, which in turn introduces new griefing risks. Grief-Free (GF) Swap reduces this to five transactions by consolidating assets and premiums on a single chain. However, no existing protocol achieves grief-free asset exchange in just four transactions.
This paper presents 4-Swap, the first cross-chain atomic swap protocol that is both grief-free and bribery-safe, while completing asset exchange in just four transactions. By combining the griefing premium and principal into a single transaction per chain, 4-Swap reduces on-chain transactions, leading to faster execution compared to previous grief-free solutions. It is fully compatible with Bitcoin and operates without the need for any new opcodes. A game-theoretic analysis shows that rational participants have no incentive to deviate from the protocol, ensuring robust compliance and security.
Cite as
Kirti Singh, Vinay J. Ribeiro, and Susmita Mandal. 4-Swap: Achieving Grief-Free and Bribery-Safe Atomic Swaps Using Four Transactions. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 32:1-32:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{singh_et_al:LIPIcs.AFT.2025.32,
author = {Singh, Kirti and Ribeiro, Vinay J. and Mandal, Susmita},
title = {{4-Swap: Achieving Grief-Free and Bribery-Safe Atomic Swaps Using Four Transactions}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {32:1--32:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.32},
URN = {urn:nbn:de:0030-drops-247514},
doi = {10.4230/LIPIcs.AFT.2025.32},
annote = {Keywords: Atomic Swaps, Griefing, Bribery, HTLC}
}
Document
Cuttlefish: A Fair, Predictable Execution Environment for Cloud-Hosted Financial Exchanges
Abstract
Recent years have seen a rising interest in cloud-hosted financial exchanges. While the public cloud platforms promise a cost-effective and more accessible option to traders, unfortunately, achieving fairness in cloud environments is challenging due to non-deterministic network latencies and execution times.
This work presents Cuttlefish, a fair-by-design cloud execution environment for algorithmic trading. The idea behind Cuttlefish is the efficient and robust mapping of real operations to a novel formulation of "virtual time". With it, Cuttlefish abstracts out the variances of the underlying network communication and computation hardware. Our implementation and evaluation not only validate the practicality of Cuttlefish, but also show its operational efficiency on public cloud platforms.
Cite as
Liangcheng Yu, Prateesh Goyal, Ilias Marinos, and Vincent Liu. Cuttlefish: A Fair, Predictable Execution Environment for Cloud-Hosted Financial Exchanges. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 33:1-33:25, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{yu_et_al:LIPIcs.AFT.2025.33,
author = {Yu, Liangcheng and Goyal, Prateesh and Marinos, Ilias and Liu, Vincent},
title = {{Cuttlefish: A Fair, Predictable Execution Environment for Cloud-Hosted Financial Exchanges}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {33:1--33:25},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.33},
URN = {urn:nbn:de:0030-drops-247521},
doi = {10.4230/LIPIcs.AFT.2025.33},
annote = {Keywords: Cloud-hosted exchanges, Financial exchanges, Computation and communication variances, Virtual time overlay}
}
Document
PvpAMM: A Perpetual Market for Unbalanced Long-Short Positions
Abstract
Perpetual futures - swap contracts without expiration dates - are the most widely traded derivatives in cryptocurrency markets. Traditional perpetual trading relies on order books, which require substantial bilateral liquidity and face challenges in high-volatility environments. In this paper, we introduce pvpAMM, a peer-to-peer perpetual trading protocol based on automated market maker (AMM) principles. The protocol enables efficient settlement of long-short mismatched markets and drives positions toward equilibrium: when the minority leveraged side wins, their returns are amplified compared to conventional perpetual contracts, while the opposite occurs when the majority side prevails. We also propose arbitrage mechanisms to maintain economic equilibrium within the pvpAMM system. By incorporating liquidity providers (LPs), the protocol aligns more closely with traditional order book trading. Numerical experiments validate our theoretical findings.
Cite as
Zhenhang Shang, Zhenyu Zhao, and Kani Chen. PvpAMM: A Perpetual Market for Unbalanced Long-Short Positions. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 34:1-34:19, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{shang_et_al:LIPIcs.AFT.2025.34,
author = {Shang, Zhenhang and Zhao, Zhenyu and Chen, Kani},
title = {{PvpAMM: A Perpetual Market for Unbalanced Long-Short Positions}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {34:1--34:19},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.34},
URN = {urn:nbn:de:0030-drops-247534},
doi = {10.4230/LIPIcs.AFT.2025.34},
annote = {Keywords: Perpetuals, Decentralized Finance, Auto Market Making, Blockchain}
}
Document
On-Chain Decentralized Learning and Cost-Effective Inference for DeFi Attack Mitigation
Abstract
Billions of dollars are lost every year in DeFi platforms by transactions exploiting business logic or accounting vulnerabilities. Existing defenses focus on static code analysis, public mempool screening, attacker contract detection, or trusted off-chain monitors, none of which prevents exploits submitted through private relays or malicious contracts that execute within the same block. We present the first decentralized, fully on-chain learning framework that: (i) performs gas-prohibitive computation on Layer-2 to reduce cost, (ii) propagates verified model updates to Layer-1, and (iii) enables gas-bounded, low-latency inference inside smart contracts. A novel Proof-of-Improvement (PoIm) protocol governs the training process and verifies each decentralized micro update as a self-verifying training transaction. Updates are accepted by PoIm only if they demonstrably improve at least one core metric (e.g., accuracy, F1-score, precision, or recall) on a public benchmark without degrading any of the other core metrics, while adversarial proposals get financially penalized through an adaptable test set for evolving threats. We develop quantization and loop-unrolling techniques that enable inference for logistic regression, SVM, MLPs, CNNs, and gated RNNs (with support for formally verified decision tree inference) within the Ethereum block gas limit, while remaining bit-exact to their off-chain counterparts, formally proven in Z3. We curate 298 unique real-world exploits (2020 - 2025) with 402 exploit transactions across eight EVM chains, collectively responsible for $3.74 B in losses. We demonstrate that on-chain ML governed by PoIm detects previously unseen attacks with over 97% attack detection accuracy and 82.0% F1. A single inference, such as one made via an external call, typically incurs zero cost. Fully on-chain inference consumes 57,603 gas (≈ $0.18) for linear models, 143,647 gas (≈ $0.49) for CNN(F2, K1), and 506,397 gas (≈ $1.77) for CNN(F8, K4) on L1 (e.g., Ethereum). Our results show that practical and continually evolving DeFi defenses can be embedded directly in protocol logic without trusted guardians, and our solution achieves highly cost-effective protection while filling a critical gap between vulnerability scanners and real-time transaction screening.
Cite as
Abdulrahman Alhaidari, Balaji Palanisamy, and Prashant Krishnamurthy. On-Chain Decentralized Learning and Cost-Effective Inference for DeFi Attack Mitigation. In 7th Conference on Advances in Financial Technologies (AFT 2025). Leibniz International Proceedings in Informatics (LIPIcs), Volume 354, pp. 35:1-35:27, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2025)
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@InProceedings{alhaidari_et_al:LIPIcs.AFT.2025.35,
author = {Alhaidari, Abdulrahman and Palanisamy, Balaji and Krishnamurthy, Prashant},
title = {{On-Chain Decentralized Learning and Cost-Effective Inference for DeFi Attack Mitigation}},
booktitle = {7th Conference on Advances in Financial Technologies (AFT 2025)},
pages = {35:1--35:27},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-400-0},
ISSN = {1868-8969},
year = {2025},
volume = {354},
editor = {Avarikioti, Zeta and Christin, Nicolas},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.35},
URN = {urn:nbn:de:0030-drops-247548},
doi = {10.4230/LIPIcs.AFT.2025.35},
annote = {Keywords: DeFi attacks, on-chain machine learning, decentralized learning, real-time defense}
}