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LIPIcs, Volume 395
8th Conference on Advances in Financial Technologies (AFT 2026)
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Leibniz International Proceedings in Informatics (LIPIcs)
Conference: Advances in Financial Technologies (AFT)
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- published at: 2026-10-02
- Publisher: Schloss Dagstuhl – Leibniz-Zentrum für Informatik
- ISBN: 978-3-95977-451-2
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Complete Volume
LIPIcs, Volume 395, AFT 2026, Complete Volume
Abstract
LIPIcs, Volume 395, AFT 2026, Complete Volume
Cite as
8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 1-784, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@Proceedings{kiayias_et_al:LIPIcs.AFT.2026,
title = {{LIPIcs, Volume 395, AFT 2026, Complete Volume}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {1--784},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026},
URN = {urn:nbn:de:0030-drops-280959},
doi = {10.4230/LIPIcs.AFT.2026},
annote = {Keywords: LIPIcs, Volume 395, AFT 2026, Complete Volume}
}
Document
Front Matter
Front Matter, Table of Contents, Preface, Conference Organization
Abstract
Front Matter, Table of Contents, Preface, Conference Organization
Cite as
8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 0:i-0:xx, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{kiayias_et_al:LIPIcs.AFT.2026.0,
author = {Kiayias, Aggelos and Kyropoulou, Maria},
title = {{Front Matter, Table of Contents, Preface, Conference Organization}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {0:i--0:xx},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.0},
URN = {urn:nbn:de:0030-drops-280944},
doi = {10.4230/LIPIcs.AFT.2026.0},
annote = {Keywords: Front Matter, Table of Contents, Preface, Conference Organization}
}
Document
BitVM: Quasi-Turing Complete Computation on Bitcoin
Abstract
A long-standing question in the blockchain community is which class of computations is efficiently expressible in cryptocurrencies with limited scripting languages, such as Bitcoin Script. Such languages expose a reduced trusted computing base, thereby being less prone to hacks and vulnerabilities, but have long been believed to support only limited classes of payments.
In this work, we confute this long-standing belief by showing for the first time that arbitrary computations can be encoded in today’s Bitcoin Script without introducing any language modification or additional security assumptions, such as trusted hardware, trusted parties, or committees with an honest majority. We present BitVM, a two-party protocol that realizes a generic virtual machine by combining cryptographic primitives and economic incentives. We conduct a formal analysis of BitVM, characterizing its functionality, system assumptions, and security properties. We further demonstrate the practicality of our approach by implementing a prototype and performing an experimental evaluation: in the optimistic case (i.e., when parties agree), our protocol requires just three on-chain transactions, whereas in the pessimistic case, the number of transactions grows logarithmically with the size of the virtual machine. We exemplify the deployment potential of BitVM by building a Bitcoin-sidechain bridge application. This work not only solves a long-standing theoretical problem, but it also promises a strong practical impact, enabling the development of complex applications in Bitcoin.
Cite as
Lukas Aumayr, Zeta Avarikioti, Robin Linus Woll, Matteo Maffei, Andrea Pelosi, Christos Stefo, and Alexei Zamyatin. BitVM: Quasi-Turing Complete Computation on Bitcoin. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 1:1-1:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{aumayr_et_al:LIPIcs.AFT.2026.1,
author = {Aumayr, Lukas and Avarikioti, Zeta and Woll, Robin Linus and Maffei, Matteo and Pelosi, Andrea and Stefo, Christos and Zamyatin, Alexei},
title = {{BitVM: Quasi-Turing Complete Computation on Bitcoin}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {1:1--1:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.1},
URN = {urn:nbn:de:0030-drops-278556},
doi = {10.4230/LIPIcs.AFT.2026.1},
annote = {Keywords: Bitcoin, quasi-Turing completeness, off-chain protocols, bridge}
}
Document
Privacy-Preserving Inclusion Lists
Abstract
Blockchains aim to provide open access and censorship resistance, but centralization of block production in blockchains like Ethereum undermines these goals. Inclusion List (IL) protocols mitigate this by requiring block proposers to include transactions selected by an IL committee to enforce the inclusion of transactions that appear to have been censored. However, protecting the confidentiality of individual committee members’ contributions is essential to prevent retaliation and ensure robust censorship resistance.
We propose a lightweight, privacy-preserving inclusion list protocol that allows committees to collectively construct transaction lists while hiding individual contributions and ensuring plausible deniability. Our approach builds on multiparty computation (MPC) techniques to achieve strong privacy without relying on heavyweight cryptography or anonymous broadcast channels.
We implement two variants of our protocol design: an optimistic version providing malicious security with abort (latency ∼ 4.0s) for speed, and a robust variant (latency ∼ 124.7s) for guaranteed output delivery in the presence of a Byzantine threshold of t < n/3 malicious parties.
Cite as
Zhengwei Tong, Saba Eskandarian, and Kartik Nayak. Privacy-Preserving Inclusion Lists. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 2:1-2:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{tong_et_al:LIPIcs.AFT.2026.2,
author = {Tong, Zhengwei and Eskandarian, Saba and Nayak, Kartik},
title = {{Privacy-Preserving Inclusion Lists}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {2:1--2:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.2},
URN = {urn:nbn:de:0030-drops-278568},
doi = {10.4230/LIPIcs.AFT.2026.2},
annote = {Keywords: Blockchain, Inclusion List, Privacy, Multiparty Computation, Censorship Resistance}
}
Document
SoK: Cryptographic Key Recovery for Cryptoasset Custody and Financial Technologies
Abstract
Cryptoasset systems often bind cryptographic key control to financial control: losing a wallet seed, custody share, hardware device, or smart-account credential can remove spend authority, while compromised recovery can enable theft. Existing work treats recovery through separate vocabularies-key backup, secret sharing, account recovery, credential re-issuance, social recovery, and asset migration-making mechanisms and tradeoffs difficult to compare.
This paper presents a Systematization of Knowledge (SoK) on cryptographic key recovery for cryptoasset custody and financial technologies. Starting from a 118-paper systematic-review discovery corpus, we derive a 77-paper synthesis corpus and code each retained system in a master matrix covering recovered objects, recovery semantics, mechanisms, enrollment and storage, authorization, trust placement, failure events, post-recovery state, validation evidence, deployment status, privacy, usability, and limitations. The matrix supports an axis-first taxonomy that separates secret-restoring, hybrid, control-restoring, forensic/extractive, and framework-oriented recovery.
Our central observation is that recovery is not a single operation: systems may reconstruct an original secret, regenerate a seed, restore a share, reissue a credential, migrate signing authority, restore account control, move assets, or extract forensic artifacts. We derive a generalized construction model, check it against production-facing designs, and identify six findings: recovery semantics are heterogeneous; recovery shifts trust; liveness improvements create abuse paths; post-recovery lifecycle management is uneven; protocol evidence outpaces user evidence; and recovery metadata remains underprotected. These gaps motivate a research agenda for recovery-aware financial technologies.
Cite as
Francisco Javier Becerra Sanchez, Antonio Ken Iannillo, and Radu State. SoK: Cryptographic Key Recovery for Cryptoasset Custody and Financial Technologies. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 3:1-3:28, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{sanchez_et_al:LIPIcs.AFT.2026.3,
author = {Sanchez, Francisco Javier Becerra and Iannillo, Antonio Ken and State, Radu},
title = {{SoK: Cryptographic Key Recovery for Cryptoasset Custody and Financial Technologies}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {3:1--3:28},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.3},
URN = {urn:nbn:de:0030-drops-278575},
doi = {10.4230/LIPIcs.AFT.2026.3},
annote = {Keywords: Cryptoasset Custody, Key Recovery, Wallet Security, Smart Accounts, Threshold Cryptography, Secret Sharing, Decentralized Identity, Secure Hardware}
}
Document
Gatling: Rapid-Fire Consensus from Parallel Composition
Abstract
Consensus protocols form the core of blockchains and other replicated state machines, ensuring that all correct nodes process the same totally ordered log of input transactions. In fault-free executions, performance is driven by the good-case transaction latency - the time between a transaction becoming known to all nodes and its confirmation by the consensus protocol - which depends on both how frequently proposals are made and, once made, how quickly they are confirmed. While prior work has established tight lower bounds on confirmation latency that modern protocols already achieve, it remains open whether the inter-proposal time can be further reduced below the state-of-the-art of one network delay.
We introduce Gatling, an atomic broadcast protocol that achieves arbitrarily small inter-proposal times under rotating leader schedules; in particular, smaller than the network delay. Gatling runs multiple parallel instances of a black-box atomic broadcast protocol and staggers their proposal schedules to generate proposals in faster succession than state-of-the-art protocols. A deterministic interleaving rule merges the outputs of these instances into a single global log. We analyze the effects of head-of-line blocking caused by crashed leaders, and derive Gatling’s optimal number of parallel instances. We further study the impact of Gatling on predictable validity and present two variants that retain this property. Finally, our experiments confirm that Gatling can be used with off-the-shelf component protocols to achieve low latency without fine-tuning the component protocol for minimum latency.
Cite as
Giulia Scaffino, Max Resnick, and Joachim Neu. Gatling: Rapid-Fire Consensus from Parallel Composition. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 4:1-4:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{scaffino_et_al:LIPIcs.AFT.2026.4,
author = {Scaffino, Giulia and Resnick, Max and Neu, Joachim},
title = {{Gatling: Rapid-Fire Consensus from Parallel Composition}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {4:1--4:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.4},
URN = {urn:nbn:de:0030-drops-278589},
doi = {10.4230/LIPIcs.AFT.2026.4},
annote = {Keywords: Distributed Systems, Byzantine Fault Tolerance Consensus, Parallel Composition, Inter-Proposal Time}
}
Document
The Consensus Number of Untraceable Cryptocurrencies
Abstract
Privacy-preserving cryptocurrencies hide which account funds a transfer among a set of candidate accounts, called its masking set. To prevent the hidden account from being spent twice, classical schemes retain the candidates and append a nullifier that marks the spent account without revealing it. Their ledgers therefore grow with every transfer. Constant-state schemes instead consume and replace the entire masking set. Here, we study the synchronization cost of this second design.
We introduce the constant untraceable asset transfer (CUAT) object. A CUAT transfer atomically replaces every account in its masking set; hence two transfers with intersecting sets cannot both succeed. We capture this contention by a conflict graph on transfer invocations, whose edges join invocations with intersecting masking sets. In one-round protocols, the relevant sets form a clique at a critical configuration. In general protocols, only sets from opposite valency classes must intersect.
Under weak untraceability, which considers one transaction in isolation, CUAT has unbounded consensus number even for one-round protocols. Under strong untraceability, which considers the complete history, accounts in a common masking set must have equal incidence. This condition makes both the one-round consensus power and CUAT’s consensus number grow quadratically with the masking-set size. Cyclic and projective-plane constructions establish the corresponding one-round lower bounds, while a recursive grid construction shows that CUAT’s consensus number is exactly the square of the masking-set size. CUAT is also not starvation-free.
The full version studies the complementary linear untraceable asset transfer (LUAT) object, which retains its masking set and records a nullifier. Its state grows, but its consensus number is two for every masking-set size and under either untraceability notion, and it is starvation-free. Thus LUAT pays for untraceability in storage, whereas CUAT pays in synchronization and fairness.
Cite as
Christian Cachin, David Lehnherr, Juan Villacis, and François-Xavier Wicht. The Consensus Number of Untraceable Cryptocurrencies. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 5:1-5:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{cachin_et_al:LIPIcs.AFT.2026.5,
author = {Cachin, Christian and Lehnherr, David and Villacis, Juan and Wicht, Fran\c{c}ois-Xavier},
title = {{The Consensus Number of Untraceable Cryptocurrencies}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {5:1--5:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.5},
URN = {urn:nbn:de:0030-drops-278593},
doi = {10.4230/LIPIcs.AFT.2026.5},
annote = {Keywords: Consensus number, untraceability, privacy-preserving cryptocurrencies, wait-freedom, masking sets, concurrent objects}
}
Document
Reserve Depletion and Security Runway in Proof-of-Stake Systems
Abstract
Many proof-of-stake protocols finance validator rewards from two sources: transaction fees and a finite reserve of native tokens. This creates a dynamic hand-off problem. Early in the life of the system, fees may be too small to fund the target level of security; later, fees may become sufficient. The central question is whether the reserve provides enough runway for the protocol to remain secure until this fee-only region is reached. We study this problem in a discrete-time stochastic model of validator participation. Token price and transaction demand fluctuate over time, while validators choose participation strategically in each state. We solve the validator entry game in closed form and derive an exact state-dependent reserve threshold: for every token price and demand state, the threshold is the minimal reserve stock necessary and sufficient to sustain a target security level. This threshold separates three regions: infeasibility, reserve-dependent security, and fee-only security. The threshold turns reserve adequacy into a hitting-time problem. Security fails when the reserve first falls below the state-dependent threshold, and a successful hand-off occurs exactly when the fee-only region is reached before that failure time. We derive conservative finite-horizon stress-test guarantees that convert lower confidence bands for token price and demand into reserve requirements, and under lognormal price-demand dynamics we obtain explicit failure-probability and expected hand-off-time bounds. Finally, we extend the model to forward-looking validators and derive the Markov participation condition that captures how current participation affects future reserve-funded rewards. The main implication is that reserve policy should not be evaluated by nominal depletion dates or steady-state reward ratios alone. A protocol can have a large nominal reserve and still be close to security failure after adverse price or demand shocks. Conversely, once demand crosses the fee-only threshold, the reserve becomes redundant for security. This paper provides a tractable equilibrium framework for stress-testing this transition.
Cite as
Paolo Penna and Manvir Schneider. Reserve Depletion and Security Runway in Proof-of-Stake Systems. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 6:1-6:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{penna_et_al:LIPIcs.AFT.2026.6,
author = {Penna, Paolo and Schneider, Manvir},
title = {{Reserve Depletion and Security Runway in Proof-of-Stake Systems}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {6:1--6:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.6},
URN = {urn:nbn:de:0030-drops-278606},
doi = {10.4230/LIPIcs.AFT.2026.6},
annote = {Keywords: Blockchain, Proof-of-Stake, Reserve Depletion, Security Runway, Validator Incentives, Tokenomics, Economic Security, Transaction Fees, Nash Equilibrium, Markov-Perfect Equilibrium, Stochastic Games}
}
Document
The Cost of Secure Restaking vs. Proof-Of-Stake
Abstract
We compare the total capital efficiency of secure restaking and Proof-of-Stake (PoS) protocols. First, we consider the sufficient condition by EigenLayer project for the restaking graph to be secure, that can be checked in a polynomial time in the restaking graph size. The condition implies that it is always possible to transform such a restaking graph into separate secure PoS protocols. We derive two main results: upper and lower bounds on the required extra stakes to add to the validators of the secure restaking graph to be able to transform it into secure PoS protocols. In particular, we show that the restaking savings compared to PoS protocols can be very large and can asymptotically grow as a square root of the number of validators. We also study a complementary question of aggregating secure PoS protocols into a secure restaking graph and provide matching lower and upper bounds on the PoS savings.
Cite as
Akaki Mamageishvili and Benny Sudakov. The Cost of Secure Restaking vs. Proof-Of-Stake. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 7:1-7:16, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{mamageishvili_et_al:LIPIcs.AFT.2026.7,
author = {Mamageishvili, Akaki and Sudakov, Benny},
title = {{The Cost of Secure Restaking vs. Proof-Of-Stake}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {7:1--7:16},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.7},
URN = {urn:nbn:de:0030-drops-278610},
doi = {10.4230/LIPIcs.AFT.2026.7},
annote = {Keywords: Proof-of-Stake, Restaking, Efficiency}
}
Document
StakeNote: A Proof-Of-Stake Protocol for CryptoNote Payments
Abstract
This work proposes StakeNote, a distributed ledger protocol that combines Proof-of-Stake (PoS) with privacy and anonymity preserving payments. The protocol combines Ouroboros Praos, a provably secure PoS protocol, with CryptoNote, a privacy-preserving payment system based on ring signatures which has been widely used in practice. We prove that StakeNote inherits the security guarantees of Ouroboros Praos and the privacy guarantees of CryptoNote. We also demonstrate its practicality via a proof of concept implementation of its cryptographic components, showing that block signing requires less than 25 ms and eligibility proofs are approx. 3 KB for anonymity sets of size 16. Finally, we discuss heuristic enhancements that potentially increase privacy and enable dynamic participation.
Cite as
Bernardo David and Dimitris Karakostas. StakeNote: A Proof-Of-Stake Protocol for CryptoNote Payments. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 8:1-8:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{david_et_al:LIPIcs.AFT.2026.8,
author = {David, Bernardo and Karakostas, Dimitris},
title = {{StakeNote: A Proof-Of-Stake Protocol for CryptoNote Payments}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {8:1--8:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.8},
URN = {urn:nbn:de:0030-drops-278622},
doi = {10.4230/LIPIcs.AFT.2026.8},
annote = {Keywords: Proof-of-Stake, anonymity, CryptoNote, ring signatures}
}
Document
Approximation and Hardness Results for the Parallel-Block Construction Problem
Abstract
Several high-throughput blockchains, including Solana, Sui, and Aptos, execute transactions in parallel across multiple cores to improve throughput and reduce latency. However, transaction conflicts induced by shared state access fundamentally couple block construction with parallel scheduling. We formalize and study the Parallel-Block Construction problem: given transactions with execution times, rewards, and conflict relations, select and schedule a subset of transactions on p parallel cores within a runtime (gas) budget to maximize total reward.
We provide a comprehensive analysis of the complexity and approximation landscape for this problem. When the number of cores p is part of the input, we prove strong inapproximability via a reduction from Maximum Clique: unless NP = ZPP, no polynomial-time algorithm achieves an n^{1-ε}-approximation for any ε > 0. For constant p and uniform processing times, we give a greedy algorithm achieving a tight (1 - 1/e)-approximation ratio. We further establish NP-completeness even for fixed p = 4 and unit-length transactions, and show that for p = 2 the problem admits an exact polynomial-time algorithm via a reduction to maximum-weight matching (with a cardinality constraint). In contrast, allowing heterogeneous processing times restores hardness: the problem becomes NP-complete for p = 2 with processing times in {1,3} (even with unit rewards). For p = 2 and processing times in {1,2}, we design a polynomial-time (2/3-δ)-approximation algorithm (for any δ > 0) via a structural decomposition and a reduction to a budgeted matching problem.
We validate our theoretical results with experiments on Ethereum mainnet execution traces. In the homogeneous setting, our (1-1/e)-approximation algorithm almost always achieves rewards above 99% of the MILP-based optimal baseline, far exceeding the guaranteed factor of 1-1/e = 0.63. In the heterogeneous setting (p = 2, processing times in {1,2}), the non-overlap variant achieves above 99% of the optimal across all tested configurations, confirming that the theoretical 2/3 bound is a pessimistic worst-case guarantee that does not reflect typical performance on real workloads.
Cite as
Arivarasan Karmegam, Alexandru Popa, Lucianna Kiffer, and Antonio Fernández Anta. Approximation and Hardness Results for the Parallel-Block Construction Problem. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 9:1-9:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{karmegam_et_al:LIPIcs.AFT.2026.9,
author = {Karmegam, Arivarasan and Popa, Alexandru and Kiffer, Lucianna and Fern\'{a}ndez Anta, Antonio},
title = {{Approximation and Hardness Results for the Parallel-Block Construction Problem}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {9:1--9:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.9},
URN = {urn:nbn:de:0030-drops-278637},
doi = {10.4230/LIPIcs.AFT.2026.9},
annote = {Keywords: Blockchain, Parallel Execution, NP-Completeness, Approximation Algorithms}
}
Document
Not All Reads Are Conflicts: A Write-Only Analysis of the Sui Blockchain
Abstract
Sui’s object-centric data model enables parallel transaction execution, but realised performance is fundamentally bounded by workload contention. Prior empirical analyses of Sui have relied on "read+write" (R+W) conflict graphs inherited from account-based blockchains. Because Sui’s engine serialises only on mutable shared access, R+W graphs contain spurious edges, bounding contention from above. In this paper, we adopt a complementary "write-set-only" (W-only) model in which every edge represents a real write-serialisation event, providing a lower bound on contention. Together, the two models bracket Sui’s true execution-dependency structure. Applying the W-only analysis to Sui mainnet data through 2025 yields three primary findings. First, removing read-only dependencies (notably the system clock) causes previously reported "hub-and-spoke" structures to collapse. The remaining contention topology is highly assortative and clique-dominated, with the W-only bound shaving roughly 30-40% off the R+W estimate of Sui’s optimal-parallelism headroom. Second, via union-find object grouping, we isolate DeepBook (Sui’s native central limit order book). While it dominates contention by volume, its underlying logic does not impose disproportionate sequential bottlenecks. Finally, we quantify the economic cost of contention, showing that 10-50% of the network’s USD-denominated value flows through sequentially constrained execution paths, exposing it to potential ordering effects.
Cite as
Haygen Tsoi, Alberto Sonnino, and Philipp Jovanovic. Not All Reads Are Conflicts: A Write-Only Analysis of the Sui Blockchain. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 10:1-10:20, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{tsoi_et_al:LIPIcs.AFT.2026.10,
author = {Tsoi, Haygen and Sonnino, Alberto and Jovanovic, Philipp},
title = {{Not All Reads Are Conflicts: A Write-Only Analysis of the Sui Blockchain}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {10:1--10:20},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.10},
URN = {urn:nbn:de:0030-drops-278641},
doi = {10.4230/LIPIcs.AFT.2026.10},
annote = {Keywords: Sui, blockchain, parallel execution, conflict graphs, transaction analysis}
}
Document
SAMM: Sharded Automated Market Maker
Abstract
The central challenge in addressing the security-performance trade-off in blockchain systems has moved from consensus protocols to enabling parallel execution. Various smart contracts (stateful blockchain programs) already benefit from parallelization. But we show that non-parallelizable operations within smart contracts remain a bottleneck. A natural approach is to apply sharding, that is, partitioning a single logical service into multiple identical parallelizable shards. However, we observe that this introduces game-theoretic issues in various applications: Participants may be incentivized to overload the system.
We focus on Automated Market Makers (AMMs), which enable token exchange: Traders swap tokens with the AMM for a fee, while liquidity providers pre-fund the AMM and receive these fees. We show experimentally that their demand will soon reach the single-thread performance limit.
We present SAMM, a sharded AMM system where multiple independent AMM shards operate on the same blockchain. The key challenge is ensuring SAMM’s security against overloading and destabilization attacks. SAMM addresses this with careful mechanism design; we provide both game-theoretic analysis and simulation-based validation. We implement SAMM on Sui and Solana testnets, achieving 5x and 16x throughput improvements, respectively, with potential for more as blockchain parallelism advances. SAMM is deployable and has already attracted industry interest.
Cite as
Hongyin Chen, Amit Vaisman, and Ittay Eyal. SAMM: Sharded Automated Market Maker. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 11:1-11:27, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{chen_et_al:LIPIcs.AFT.2026.11,
author = {Chen, Hongyin and Vaisman, Amit and Eyal, Ittay},
title = {{SAMM: Sharded Automated Market Maker}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {11:1--11:27},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.11},
URN = {urn:nbn:de:0030-drops-278653},
doi = {10.4230/LIPIcs.AFT.2026.11},
annote = {Keywords: Security, blockchain, automated market makers, game theory}
}
Document
Defensive Rebalancing in Networks of Automated Market Makers
Abstract
This paper introduces and analyzes defensive rebalancing, a novel mechanism for preventing arbitrageurs from extracting surplus from networks of constant-function market makers (CFMMs).
A rebalancing transfers assets directly from one CFMM’s pool to another’s, bypassing the CFMMs' standard trading protocols. In any arbitrage-prone configuration, we prove there exists a rebalancing to an arbitrage-free configuration that strictly increases the liquidity of at least one participating CFMM without decreasing the liquidity of any other participating CFMM. Moreover, we prove that a configuration is arbitrage-free if and only if it is Pareto efficient under rebalancing.
We prove that for any log-concave trading function, including the ubiquitous constant-product market maker, finding an optimal arbitrage-free rebalancing that maximizes the aggregate liquidity of the participating CFMMs while preserving each participant’s liquidity can be formulated as a convex optimization problem with a unique, computationally tractable solution.
We extend this framework to mixed rebalancing, where a subset of participating CFMMs use a combination of direct transfers and standard trades to transition to an arbitrage-free configuration while capturing arbitrage opportunities from non-participating CFMMs and external price-setting oracles such as centralized exchanges.
Our results provide a rigorous foundation for future CFMM protocols that coordinate defensive rebalancing to internalize arbitrage surplus within networks of CFMMs.
Cite as
Sam Devorsetz and Maurice Herlihy. Defensive Rebalancing in Networks of Automated Market Makers. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 12:1-12:17, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{devorsetz_et_al:LIPIcs.AFT.2026.12,
author = {Devorsetz, Sam and Herlihy, Maurice},
title = {{Defensive Rebalancing in Networks of Automated Market Makers}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {12:1--12:17},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.12},
URN = {urn:nbn:de:0030-drops-278665},
doi = {10.4230/LIPIcs.AFT.2026.12},
annote = {Keywords: Automated Market Makers, Arbitrage, Convex Optimization}
}
Document
Multi-Currency AMMs for Decentralized FOREX Markets: Feasibility & Optimal Design
Abstract
Most currency pairs lack a direct liquid market, so international foreign exchange relies on routing transactions through a dominant vehicle currency. Multi-currency automated market makers (AMMs) offer an alternative by sharing liquidity across many currency pairs, facilitating direct cross-currency trade while exploiting liquidity consolidation. This paper studies a multi-currency pool design that minimizes trading cost. Under a constant-mean AMM architecture, equilibrium trading costs reflect the trade-off between reduced price impact from consolidated liquidity and increased impermanent loss from joint return risk. This work derives closed-form costs, characterizes optimal pool weights, and shows that the optimized multi-currency pool dominates the status quo over a range of market parameters. It then formulates the system-level problem of partitioning currencies into multi-currency pools, which is solved using a hierarchical agglomerative clustering algorithm. Empirically, using exchange rate and trade data for 43 currencies over 2008-2023, the algorithm runs in 1.6 seconds and produces pools with geographic and economic structure. Notably, this reduces realized costs by 13% relative to the status quo of vehicle-currency routing, with gains stable through episodes of global financial stress.
Cite as
Reina Ke Xin Li, Andreas Park, Andreas Veneris, and Srisht Fateh Singh. Multi-Currency AMMs for Decentralized FOREX Markets: Feasibility & Optimal Design. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 13:1-13:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{li_et_al:LIPIcs.AFT.2026.13,
author = {Li, Reina Ke Xin and Park, Andreas and Veneris, Andreas and Singh, Srisht Fateh},
title = {{Multi-Currency AMMs for Decentralized FOREX Markets: Feasibility \& Optimal Design}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {13:1--13:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.13},
URN = {urn:nbn:de:0030-drops-278671},
doi = {10.4230/LIPIcs.AFT.2026.13},
annote = {Keywords: automated market makers, decentralized finance, currency foreign exchange}
}
Document
Extended Abstract
Uniform-Loss Automated Market Making for Prediction Markets (Extended Abstract)
Abstract
Automated market makers (AMMs) for prediction markets descend from market scoring rules, where a mechanism operator subsidizes a market to aggregate beliefs about uncertain events. The existing literature has focused on bounding the total worst-case loss to the subsidizer, but has not addressed how that loss is distributed across price states or over time. We use the framework of loss-versus-rebalancing (LVR) to study this distribution and introduce uniform AMMs, defined by the property that instantaneous LVR is proportional to pool value and independent of the current token price. In a static setting, we show that for a broad class of win-martingales - processes that converge to 0 or 1 at a fixed resolution time - there exists a pricing function that achieves uniform LVR under that process, and conversely, that any sufficiently regular pricing function induces a win-martingale under which it is uniform. We then extend the framework to dynamic liquidity management, showing that liquidity levels can be adjusted over time to implement a prescribed target expected cumulative loss schedule. This theory is illustrated with canonical examples of win-martingales and pricing functions. Our results can inform AMM designers and liquidity providers on how the inevitable cost of subsidizing price discovery can be shaped and controlled across both price and time.
Cite as
Ciamac C. Moallemi, Dan Robinson, and Brian Zhu. Uniform-Loss Automated Market Making for Prediction Markets (Extended Abstract). In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 14:1-14:3, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{moallemi_et_al:LIPIcs.AFT.2026.14,
author = {Moallemi, Ciamac C. and Robinson, Dan and Zhu, Brian},
title = {{Uniform-Loss Automated Market Making for Prediction Markets}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {14:1--14:3},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.14},
URN = {urn:nbn:de:0030-drops-278684},
doi = {10.4230/LIPIcs.AFT.2026.14},
annote = {Keywords: Prediction markets, automated market makers, loss-versus-rebalancing, win-martingales, liquidity provision}
}
Document
ParlayMarket: Automated Market Making for Parlay-Style Joint Contracts
Abstract
Prediction markets are powerful mechanisms for information aggregation, but existing designs are optimized for single-event contracts. Traders frequently express beliefs about joint outcomes - sports parlays, conditional forecasts, multi-scenario financial bets. Current platforms either prohibit such trades or rely on ad hoc mechanisms that ignore correlation structure, resulting in inefficient prices and fragmented liquidity. We introduce ParlayMarket, an automated market-maker for parlay-style joint contracts. The mechanism maintains a shared pairwise exponential-family belief state, so all base and parlay prices are marginals of one coherent distribution. This compresses the 2^M outcome space into O(M²) sufficient statistics and allows one liquidity pool to support an exponentially large family. Our main result characterizes the resulting learning and loss dynamics. Under repeated trading, prices converge to the best pairwise approximation of the true joint distribution. The induced expected market-maker loss grows at most quadratically in the number of base events, rather than exponentially in the number of listed parlays; moreover, this quadratic dependence is worst-case optimal for dense pairwise dependence, since there are O(M²) independent correlation directions to learn. Parlay trades are essential to this guarantee: they provide direct constraints on joint outcomes and reduce steady-state error relative to learning from marginal trades alone. Experiments on synthetic correlated markets and historical Kalshi combo data confirm the predicted scaling and show that the mechanism remains effective in realistic market-making settings. Our results demonstrate that combinatorial expressiveness does not require combinatorial capital.
Cite as
Ranvir Rana, Viraj Nadkarni, Niusha Moshrefi, and Pramod Viswanath. ParlayMarket: Automated Market Making for Parlay-Style Joint Contracts. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 15:1-15:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{rana_et_al:LIPIcs.AFT.2026.15,
author = {Rana, Ranvir and Nadkarni, Viraj and Moshrefi, Niusha and Viswanath, Pramod},
title = {{ParlayMarket: Automated Market Making for Parlay-Style Joint Contracts}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {15:1--15:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.15},
URN = {urn:nbn:de:0030-drops-278697},
doi = {10.4230/LIPIcs.AFT.2026.15},
annote = {Keywords: Prediction markets, automated market makers, parlays, market scoring rules, online learning}
}
Document
Extended Abstract
On Sybil-Proof Mechanisms (Extended Abstract)
Abstract
We show that in the single-parameter mechanism design environment, the only non-wasteful, symmetric, incentive compatible and Sybil-proof direct mechanism is a second price auction with symmetric tie-breaking. Thus, if there is private information, lotteries or other mechanisms that do not always allocate to a highest-value bidder are not Sybil-proof or not incentive compatible. Moreover, we show that our main (im)possibility result extends beyond linear valuations, but not to multi-unit object allocation with unit-demand bidders. We also provide examples of mechanisms (with higher interim payoff for the bidders than a second price auction) that satisfy all of the other axioms and a weaker, Bayesian notion of Sybil-proofness. Thus, our (im)possibility result does not generalise to the Bayesian setting and we have a larger design space: With Sybil constraints, equivalence between dominant strategy and Bayesian implementation (that holds in classical single-parameter mechanism design without Sybils) no longer holds.
Cite as
Minghao Pan, Bruno Mazorra, Christoph Schlegel, and Akaki Mamageishvili. On Sybil-Proof Mechanisms (Extended Abstract). In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 16:1-16:3, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{pan_et_al:LIPIcs.AFT.2026.16,
author = {Pan, Minghao and Mazorra, Bruno and Schlegel, Christoph and Mamageishvili, Akaki},
title = {{On Sybil-Proof Mechanisms}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {16:1--16:3},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.16},
URN = {urn:nbn:de:0030-drops-278700},
doi = {10.4230/LIPIcs.AFT.2026.16},
annote = {Keywords: Sybils, Mechanism Design, Blockchain}
}
Document
Belief-Aware Pivotal Mechanism for DAO Committees
Abstract
Decentralized Autonomous Organizations (DAOs) increasingly delegate decisions to small committees whose members hold two independent kinds of private information: idiosyncratic preferences over alternatives (what they want) and beliefs about which alternative best serves the organization (what they know). Members have no reason to reveal what they know unless they are incentivized to do so.
Standard voting rules are designed to extract only what members want. If these two pieces of information are not aligned, the organization can end up making a suboptimal decision. Existing mechanisms for eliciting (extracting) beliefs from experts, such as Decision Scoring Rules and Decision Markets, face well-known impossibility results in multi-agent settings under deterministic decision rules, and ignore the fact that agents can have idiosyncratic preferences over alternatives.
This paper proposes a mechanism for binary committee decisions that augments the pivotal mechanism, an instance of the Groves mechanism, with a reward that depends on the outcome distributed after a boolean signal, indicating success or failure of the outcome, is observed. The mechanism aggregates the experts' private information to maximize the probability that its decision agrees with a weighted linear pooling of the experts' beliefs, framing the designer’s problem as classification rather than welfare maximization.
An affine family of reward rules is proposed, and the region of parameters that simultaneously satisfy dominant-strategy incentive compatibility, interim individual rationality, and budget feasibility is derived. In informative-belief environments, the mechanism outperforms majority voting, including majority voting augmented with the same outcome-contingent rewards, especially when the committee’s average preferences are biased against the superior alternative.
Cite as
Nuno Braz, Diogo Poças, and Miguel Correia. Belief-Aware Pivotal Mechanism for DAO Committees. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 17:1-17:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{braz_et_al:LIPIcs.AFT.2026.17,
author = {Braz, Nuno and Po\c{c}as, Diogo and Correia, Miguel},
title = {{Belief-Aware Pivotal Mechanism for DAO Committees}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {17:1--17:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.17},
URN = {urn:nbn:de:0030-drops-278712},
doi = {10.4230/LIPIcs.AFT.2026.17},
annote = {Keywords: Mechanism Design, Decentralized Autonomous Organizations, Committees, Information Aggregation}
}
Document
Credible Auctions via MPC Gadgets: Bounding Information Leakage Under Abort
Abstract
The design of credible auctions - mechanisms where a revenue-maximizing auctioneer has no incentive to deviate from the protocol - faces a fundamental cryptographic barrier when the auctioneer controls shill bidders. While a natural approach is to use Secure Multi-Party Computation (MPC) to remove the trusted auctioneer, Cleve’s (1986) impossibility of fair coin flipping implies that monolithic MPC protocols grant the auctioneer a "free option": they can learn the auction’s outcome and unilaterally abort if the revenue is unsatisfactory. Previous attempts to mitigate this abort asymmetry using cryptographic commitments and ex-ante penalties fail for heavy-tailed distributions. We overcome this impossibility by introducing the MPC Decomposition Principle. Rather than encrypting the entire mechanism, we use MPC strictly as an information-restriction tool. We isolate the winner determination problem into a minimal MPC gadget that computes and reveals the winner’s identity but no payment information. This qualitative restriction mathematically bounds the information leaked upon an abort. By combining this gadget with sequential revelation and finite economic penalties, we design the Sequential Revelation Auction (SRA). We prove that bounding the information leakage strictly bounds the value of the free option, showing that a penalty of κ ≥ ∑_{i=1}^n Rev(F_i) is sufficient for credibility, and tight in the worst case: for the equal-revenue distribution - where this threshold coincides exactly with the optimal revenue - every smaller penalty admits a profitable deviation. Leveraging low-round-complexity MPC, the SRA resolves an open question of [Akbarpour and Li, 2020] and [Ferreira and Weinberg, 2020] by providing the first constant-round, incentive-compatible, revenue-optimal credible auction for all product distributions.
Cite as
Matheus V. X. Ferreira. Credible Auctions via MPC Gadgets: Bounding Information Leakage Under Abort. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 18:1-18:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{ferreira:LIPIcs.AFT.2026.18,
author = {Ferreira, Matheus V. X.},
title = {{Credible Auctions via MPC Gadgets: Bounding Information Leakage Under Abort}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {18:1--18:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.18},
URN = {urn:nbn:de:0030-drops-278726},
doi = {10.4230/LIPIcs.AFT.2026.18},
annote = {Keywords: Multi-Party Computation, Credible Auctions, Revenue-optimal Auctions, Cryptographic Auctions}
}
Document
Competing Auctions in Intermediated Markets
Abstract
We analyze competing auctions in intermediated markets, where a seller selects among parallel mechanisms for the sale of a single good, most prominently the relay-and-protocol architecture of proposer-builder separation in Ethereum.
When the intermediary can enforce single-homing on its bidders, sealed-bid second-price intermediary auctions fully unravel into the sealed first-price principal auction; open bidding-format intermediaries unravel only partially, collapsing into first-price in equilibrium under symmetric latency and sorting fast bidders to the intermediary under asymmetric latency. Any last-look advantage is removed through the availability of a credible sealed bidding channel. These results extend to multi-plexing environments (no enforcement by the intermediary).
While the unraveling result indicates that the availability of a sealed first-price bidding channel pushes the overall market to the same auction structure, the very assumption of the credibility of such a channel is problematic, as the seller may have an incentive to leak information: a first-price auction is leakage-resistant in the presence of a single "fast" bidder but not against two or more. However, if the seller can credibly commit to not leak bids, it is optimal for them to do so.
A main motivation is the forthcoming Glamsterdam update of Ethereum: our analysis suggests that the availability of an in-protocol (first-price) bidding channel severely limits the design space for out-of-protocol auctions by relays and other intermediaries.
Cite as
Bruno Mazorra, Minghao Pan, and Christoph Schlegel. Competing Auctions in Intermediated Markets. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 19:1-19:21, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{mazorra_et_al:LIPIcs.AFT.2026.19,
author = {Mazorra, Bruno and Pan, Minghao and Schlegel, Christoph},
title = {{Competing Auctions in Intermediated Markets}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {19:1--19:21},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.19},
URN = {urn:nbn:de:0030-drops-278738},
doi = {10.4230/LIPIcs.AFT.2026.19},
annote = {Keywords: Competing auctions, proposer-builder separation, maximal extractable value}
}
Document
Just-In-Time Resale in an Ahead-Of-Time Auction for Faster Execution
Abstract
We study Arbitrum’s Timeboost auction, an ahead-of-time mechanism that sells a 200 ms ordering advantage in an otherwise first-come, first-served transaction ordering policy. The market naturally divides into two phases: a competition phase, in which the dominant searchers compete directly in the primary auction, and a coordination phase, in which they source fast-lane access through Kairos, a Just-in-Time resale intermediary. We use auction bids, time-boosted transactions, and on-chain payment traces to study how well ahead-of-time bids predict realized CEX-DEX arbitrage profits and how the emergence of resale changes surplus allocation.
We find that ahead-of-time bids are noisy predictors of short-horizon arbitrage profits. During the competition phase, bid-profit correlations are statistically significant but economically modest at the round level, while correlations increase when profits are aggregated over longer horizons. This suggests that bidders can identify favorable market conditions but face substantial uncertainty about the realized value of any individual one-minute fast-lane interval. After the Kairos transition, competition in the primary auction weakens sharply: in our focused transition-analysis window, paid bids fall from 62.7% of the top bid before the transition to 14.8% thereafter, while total searcher profits remain broadly similar. The resulting dynamics are most consistent with coordination through a common intermediary rather than direct competition in the primary auction. More broadly, our findings suggest that ahead-of-time allocation mechanisms can be vulnerable to secondary-market intermediation when competition among dominant participants is weak.
Cite as
Burak Öz, Akaki Mamageishvili, Christoph Schlegel, and Ali Taslimi. Just-In-Time Resale in an Ahead-Of-Time Auction for Faster Execution. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 20:1-20:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{oz_et_al:LIPIcs.AFT.2026.20,
author = {\"{O}z, Burak and Mamageishvili, Akaki and Schlegel, Christoph and Taslimi, Ali},
title = {{Just-In-Time Resale in an Ahead-Of-Time Auction for Faster Execution}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {20:1--20:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.20},
URN = {urn:nbn:de:0030-drops-278740},
doi = {10.4230/LIPIcs.AFT.2026.20},
annote = {Keywords: ahead-of-time auctions, secondary markets, Timeboost, arbitrage}
}
Document
Towards Decentralized Searcher Competition in MEV Markets
Abstract
Centralization in maximal extractable value (MEV) markets is a significant concern for blockchain systems, as persistent concentration of economic power can weaken competition, reduce openness, and undermine the decentralization goals of permissionless protocols. While much of the existing analysis has focused on builders, validators, and block-building markets, this paper studies centralization from the perspective of searcher competition. We develop a heterogeneous model in which searchers differ in opportunity coverage and execution efficiency, and we analyze how auction design affects fairness, decentralization, and security among searchers competing for the same MEV opportunity.
To evaluate searcher competition, we introduce two metrics: a Shapley-weighted Jain fairness index, which measures whether rewards are proportional to searchers' marginal contributions, and an expected-reward Herfindahl-Hirschman Index (HHI), which measures concentration in long-run searcher rewards. Using these metrics, we first analyze the standard first-price, winner-take-all auction as a benchmark. Our analysis shows that, under searcher heterogeneity, first-price competition can reward rank dominance rather than marginal contribution, leading to concentrated rewards and weaker contribution-adjusted fairness.
Motivated by these limitations, we propose an entry-filtered Shapley-capped auction mechanism that distributes searcher rewards more fairly and broadly among admitted high-quality submissions. Designing such a mechanism in a permissionless blockchain environment is challenging: searchers may create Sybil identities by submitting copied or degraded versions of the same execution strategy, and validators may collude with searchers to increase joint payoff. We address these concerns through Bayesian security constraints for copied-code Sybil deviations and validator-searcher coalition deviations, and show that suitable parameter choices make the Shapley-capped mechanism secure against both.
We complement the theoretical analysis with numerical benchmarks and Ethereum on-chain data. The theoretical benchmarks show that the proposed mechanism is especially effective in centralized opportunity classes, where first-price competition concentrates rewards among a small set of searchers. They further indicate that the proposed mechanism is a potential improvement over first-price competition in empirically motivated opportunity types.
Cite as
Roozbeh Sarenche and Yunwen Liu. Towards Decentralized Searcher Competition in MEV Markets. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 21:1-21:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{sarenche_et_al:LIPIcs.AFT.2026.21,
author = {Sarenche, Roozbeh and Liu, Yunwen},
title = {{Towards Decentralized Searcher Competition in MEV Markets}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {21:1--21:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.21},
URN = {urn:nbn:de:0030-drops-278750},
doi = {10.4230/LIPIcs.AFT.2026.21},
annote = {Keywords: Maximal extractable value, MEV, searcher competition, mechanism design, Sybil resistance, Shapley value, reward decentralization}
}
Document
SoK: Encrypted Mempools Through the MEV Lens
Abstract
MEV and censorship, fuelled by public mempool visibility, remain existential threats to Ethereum and have recently started to spread to its layer-two ecosystem. Encrypted mempools promise to conceal transaction content until ordering is final. While this sounds appealing, their viability rests on cryptographic, economic, and deployment trade-offs.
This paper systematises the evolution of threshold-encrypted mempools, from early schemes such as Shutter and Ferveo to the most recent research, and analyses how successive iterations have resolved bottlenecks like committee communication overhead, lack of pending transaction privacy, and position-dependent encryption. We highlight a convergence along four design axes, namely batched decryption to mitigate latency, silent setup to eliminate the complexity of distributed key generation, epochless encryption to remove position dependency, and collision-free encoding to prevent slot-collision censorship. We further survey the active Ethereum deployment debate, including EIP-8105 and the LUCID headliner submission, and map the requirements raised there onto the cryptographic corpus.
We conclude by exposing a critical limitation common to all current proposals: blind ordering and binary decryption together suppress not only the toxic part of MEV that motivated encrypted mempools, but also the same-block auction mechanisms that return value to users and sustain geographic decentralisation of the network. We argue for a programmable-privacy direction in which encrypted state can be acted on by trusted code before plaintext revelation.
Cite as
Jonathan Passerat-Palmbach. SoK: Encrypted Mempools Through the MEV Lens. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 22:1-22:25, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{passeratpalmbach:LIPIcs.AFT.2026.22,
author = {Passerat-Palmbach, Jonathan},
title = {{SoK: Encrypted Mempools Through the MEV Lens}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {22:1--22:25},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.22},
URN = {urn:nbn:de:0030-drops-278761},
doi = {10.4230/LIPIcs.AFT.2026.22},
annote = {Keywords: Encrypted mempools, threshold encryption, MEV, Ethereum, proposer-builder separation, order-flow auctions, programmable privacy}
}
Document
RANDAO Manipulation in the Presence of MEV
Abstract
Ethereum’s randomness beacon (RANDAO) is well-known to be manipulable, and prior work [Alpturer and Weinberg, 2024] computes the precise fraction of blocks a strategic proposer can propose. The fraction of blocks proposed, however, is only a proxy for participants' rewards. We propose a generalized reward model capturing many canonical forms of rewards: consensus reward rollover, multi-block MEV, CEX-DEX arbitrage, oracle manipulation, and others. We provide a methodology that computes an ε-optimal strategy for any reward scheme in our model (and in particular, any combination of the above rewards). Finally, we apply our methodology to several canonical examples, and establish the sensitivity of RANDAO manipulation to the underlying rewards. We find that if rewards partially roll over, or scale super-linearly with consecutive blocks, the incentive to manipulate RANDAO is amplified. Lastly, we investigate tail-slot slashing, which can be modeled as a reward function, and show that honest equilibria can be recovered.
Cite as
Kaya Alpturer, Nicholas Hope, and S. Matthew Weinberg. RANDAO Manipulation in the Presence of MEV. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 23:1-23:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{alpturer_et_al:LIPIcs.AFT.2026.23,
author = {Alpturer, Kaya and Hope, Nicholas and Weinberg, S. Matthew},
title = {{RANDAO Manipulation in the Presence of MEV}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {23:1--23:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.23},
URN = {urn:nbn:de:0030-drops-278776},
doi = {10.4230/LIPIcs.AFT.2026.23},
annote = {Keywords: Proof of Stake, Consensus, Blockchain, Ethereum, Randomness manipulation}
}
Document
To Wait or to Probe: Arbitrage Competition on High-Throughput Blockchains
Abstract
Maximal Extractable Value (MEV) on high-throughput blockchains can be captured through targeted search, where bots identify opportunities off-chain and submit route-committed transactions, or through probabilistic search, where bots submit repeated attempts that discover opportunities during on-chain execution. This distinction has direct implications for spam, blockspace consumption, and protocol revenue. We model how ordering granularity, fee floors, and opportunity-access shocks shape competition between these architectures. Using cyclic arbitrage data on Base from June 2025 to February 2026, we develop a trace-level classifier for search architectures and show that the resulting labels correspond to distinct execution behavior. In our sample, probabilistic search accounts for only 23% of arbitrage activity but produces 95% of spam and consumes 20% of Base gas. We test the model across three episodes: Flashblocks selects against broad on-chain probabilistic scanners; token-launch opportunity shocks temporarily revive probabilistic search; and higher fee floors select against probabilistic bots whose opportunity flow cannot sustain repeated attempts. After Base’s configuration changes, protocol revenue shifts toward successful arbitrages and away from spam, probabilistic bots pay higher priority fees, and spam consumes a smaller share of blockspace.
Cite as
Fei Wu and Burak Öz. To Wait or to Probe: Arbitrage Competition on High-Throughput Blockchains. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 24:1-24:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{wu_et_al:LIPIcs.AFT.2026.24,
author = {Wu, Fei and \"{O}z, Burak},
title = {{To Wait or to Probe: Arbitrage Competition on High-Throughput Blockchains}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {24:1--24:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.24},
URN = {urn:nbn:de:0030-drops-278788},
doi = {10.4230/LIPIcs.AFT.2026.24},
annote = {Keywords: Maximal Extractable Value, cyclic arbitrage, spam, Base}
}
Document
The Price of Decentralization in Block Building
Abstract
Decentralized block building mechanisms replace the monopoly of a single proposer with multiple builders. However, their censorship-resistance and fair-access benefits depend not only on the number of builders, but also on where builders are geographically positioned to provide transaction coverage. We study this tension between builder location choice, user transaction coverage, and utility concentration by modeling decentralized block building as a stochastic coverage game. Builders choose regions, information sources emit transactions over a block construction round, and latency determines whether a transaction is received before the deadline.
We show that the game is an exact potential game and admits a pure Nash equilibrium. We prove an asymptotically tight factor-2 bound on the Price of Anarchy, which we interpret as the price of decentralization from uncoordinated builder placement. We also study builder utility concentration, showing that the lowest-utility builder earns at least half of the highest-utility builder’s payoff, and the utility-share HHI is at most 12.5% above the egalitarian benchmark. We complement the theory with simulations under richer latency and source environments and show that slot times, builder participation, and reward-sharing rules are important protocol design choices that can shape the price of decentralization.
Cite as
Burak Öz, Fei Wu, Luis Correia, Sen Yang, Bruno Mazorra, and Stefanos Leonardos. The Price of Decentralization in Block Building. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 25:1-25:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{oz_et_al:LIPIcs.AFT.2026.25,
author = {\"{O}z, Burak and Wu, Fei and Correia, Luis and Yang, Sen and Mazorra, Bruno and Leonardos, Stefanos},
title = {{The Price of Decentralization in Block Building}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {25:1--25:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.25},
URN = {urn:nbn:de:0030-drops-278791},
doi = {10.4230/LIPIcs.AFT.2026.25},
annote = {Keywords: decentralization, block building, potential game, price of anarchy}
}
Document
Price of Censorship: Censorship Resistance and Throughput Under Rational Concurrent Proposers
Abstract
Censorship resistance is the defining advantage of blockchains over their centralized counterparts. Yet block proposers censor transactions for many reasons, from legal consequences to economic incentives. We study economically-incentivized censorship, modeled by an adversary who bribes proposers to exclude a target transaction, and define the economic censorship resistance (eCR) of a transaction as the adversary’s expected cost of successful censorship divided by the user’s expected payment for inclusion. Single-proposer systems are structurally weak by this measure: under a first-price auction the adversary need only match the user’s bid, and fee burning pushes eCR to a few percent of what the user pays.
We therefore turn to multiple concurrent proposers (MCP), where block capacity is divided among n proposers and the block is the union of their sub-blocks.While MCP can substantially increase the cost of censorship by requiring the adversary to bribe many proposers, it also introduces transaction duplication, reducing throughput. The resulting trade-off depends critically on the transaction fee mechanism (TFM), which determines how fees are shared among competing proposers.
We create a game theoretic model where validators construct blocks from a shared mempool, subject to an adversary’s bribery attempt. We provide an algorithm that solves for the mixed equilibrium of a given mempool, which is characterized by the probability of including each transaction. This algorithm works for a wide class of TFMs, and allows us to calculate the expected throughput and censorship resistance for any bid distribution. We then use simulations to show how the eCR and throughput vary as the number of proposers increases. We compare three TFMs, finding that the duplication-penalizing TFM dominates the others across many settings. We also validate our findings with empirical Ethereum data.
We find that MCP systems enjoy much higher eCR than single proposer systems. While burnt user fees can significantly lower eCR, eCR scales linearly with the number of validators, and thus strong eCR can be achieved even in the presence of significant burn. Overall, our results show that MCP systems are, with the correct TFM, significantly more robust to censorship.
Cite as
Aditya Saraf, Ioannis Kaklamanis, Sarisht Wadhwa, and Fatima Elsheimy. Price of Censorship: Censorship Resistance and Throughput Under Rational Concurrent Proposers. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 26:1-26:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{saraf_et_al:LIPIcs.AFT.2026.26,
author = {Saraf, Aditya and Kaklamanis, Ioannis and Wadhwa, Sarisht and Elsheimy, Fatima},
title = {{Price of Censorship: Censorship Resistance and Throughput Under Rational Concurrent Proposers}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {26:1--26:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.26},
URN = {urn:nbn:de:0030-drops-278804},
doi = {10.4230/LIPIcs.AFT.2026.26},
annote = {Keywords: blockchains, multiple concurrent proposers, censorship resistance}
}
Document
The Execution Dilemma in Pessimistic Blockchains: Profitability XOR Fair Ordering
Abstract
The successive generations of consensus algorithms progressively displaced the performance bottleneck of blockchains to the execution layer. Recent works address the execution performance bottleneck by parallelizing the execution of non-conflicting transactions. Historically, execution closely followed the consensus-level transaction ordering determined by validators, a practice highly susceptible to Maximal Extractable Value (MEV) exploitation. Conversely, recent academic proposals introduce rigid fair-ordering protocols that are bound to severely restrict transaction reordering at the execution layer. Parallel execution frameworks optimize the sequencing layer, which lies between consensus and execution and assembles transaction batches from committed consensus blocks and transmits them to execution workers to maximize both execution parallelism and realized transaction fees. To achieve this optimization, current sequencing implementations may defer transactions. Importantly, these implementations do not maintain order-fairness properties. To the best of our knowledge, preserving these properties currently requires sequential execution, which would drastically reduce both profitability and performance.
In this work, we address the tension between validator profit and order fairness using a dynamic optimization framework. We introduce a blockchain-agnostic model for transaction sequencing in a continuous setting where block sequencing and execution run concurrently. Consequently, when sequencing cannot be completed within the available time window, our framework dynamically returns its best intermediate result. Within this framework, we propose an anytime genetic algorithm that utilizes gas prices, object sets, and predicted execution times to optimize schedules. We also augment this algorithm to optionally maintain fair-ordering. We evaluate our approach with real-world datasets from Sui and Ethereum, and demonstrate that it increases validator profit by approximately 15% and accelerates congestion relief speed by up to 58%. Furthermore, we quantify the impact of fair-ordering constraints, showing that they can reduce validator profit by 50% to 60% during periods of high congestion. We provide the first evidence that enforcing strict fair ordering might effectively nullify the advantages of advanced sequencing.
Cite as
Artjom Pugatsov, Can Umut Ileri, and Jérémie Decouchant. The Execution Dilemma in Pessimistic Blockchains: Profitability XOR Fair Ordering. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 27:1-27:26, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{pugatsov_et_al:LIPIcs.AFT.2026.27,
author = {Pugatsov, Artjom and Ileri, Can Umut and Decouchant, J\'{e}r\'{e}mie},
title = {{The Execution Dilemma in Pessimistic Blockchains: Profitability XOR Fair Ordering}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {27:1--27:26},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.27},
URN = {urn:nbn:de:0030-drops-278814},
doi = {10.4230/LIPIcs.AFT.2026.27},
annote = {Keywords: Blockchain, Execution layer, Sequencing, Byzantine Fault Tolerance}
}
Document
Inside Qubic’s Selfish Mining Campaign on Monero: Evidence, Tactics, and Limits
Abstract
In 2025, the blockchain network Qubic conducted a mining campaign on Monero, a privacy-focused cryptocurrency. It publicly presented the campaign as a "51% takeover" and a demonstration of selfish mining. The episode provides a rare opportunity to test such claims in a privacy-preserving proof-of-work network, where pool attribution and private release decisions are difficult to observe. We combine Monero node measurements, Qubic pool observations, community-shared artifacts, and disclosed view keys to attribute blocks and identify candidate withholding periods. Rather than sustained majority control, we observe elevated orphaning and deeper reorganizations. Qubic did not follow a single optimized selfish mining strategy, instead varying between standard selfish mining and more defensive block-release decisions. Across the campaign, it gained no reward advantage over honest mining. Community monitoring and Qubic’s countermeasures reveal how real-world mining campaigns evolve in response to an active ecosystem. Overall, the campaign disrupted Monero without exhibiting a stable profit-maximizing strategy, leaving open disruptive incentives beyond direct mining rewards.
Cite as
Suhyeon Lee and Hyeongyeong Kim. Inside Qubic’s Selfish Mining Campaign on Monero: Evidence, Tactics, and Limits. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 28:1-28:19, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{lee_et_al:LIPIcs.AFT.2026.28,
author = {Lee, Suhyeon and Kim, Hyeongyeong},
title = {{Inside Qubic’s Selfish Mining Campaign on Monero: Evidence, Tactics, and Limits}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {28:1--28:19},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.28},
URN = {urn:nbn:de:0030-drops-278821},
doi = {10.4230/LIPIcs.AFT.2026.28},
annote = {Keywords: Blockchain, Proof-of-Work, Selfish Mining, Monero}
}
Document
When Does Being Selfish Pay Off? Temporal Composability and Profitability in Selfish Mining
Abstract
Selfish mining undermines incentive compatibility of proof-of-work blockchains, letting a miner earn disproportionate rewards at a hashrate lower than the majority threshold. A decade of research has investigated whether a strategy is profitable, however, far less is understood about when it becomes profitable. Timing is critical since selfish mining operates at a loss before it turns a profit, typically requiring tens of weeks to break even in the classic case.
In this paper, we present a holistic study of the time-to-profitability (TTP) of existing selfish mining strategies structured around four contributions. First, in the single-attacker setting, we characterize TTP across the full strategy space and find that TTP-minimizing and profit-maximizing strategies frequently diverge, making attack horizon a critical metric. In particular, under realistic fee dynamics, the use of incentive transactions to recruit honest-but-rational miners enables reaching profitability up to 15× faster than classic selfish mining at the same hash rate. Second, we study TTP for the first time in the multi-attacker setting, showing that the difference in strategies between opposing attackers has a dramatic impact on join profitability. Third, we generalize intermittent selfish mining by examining temporal composition over the full strategy space and showing that its purported benefits are largely overstated; alternating strategies rarely outperforms the best static strategy in terms of TTP and long-term profits.
Finally, and building on these findings, we investigate adaptive, state-conditioned strategy selection at the difficulty adjustment period (DAP) level. We compare a general-purpose LLM agent against a fixed decision-tree selector. We find that both selectors reliably identify profit-maximizing strategies from observed network conditions, at a low operational cost, thus lowering the expertise barrier to exploiting adaptive selfish mining.
Cite as
Colin Finkbeiner, Connor Shaw, and Ghada Almashaqbeh. When Does Being Selfish Pay Off? Temporal Composability and Profitability in Selfish Mining. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 29:1-29:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{finkbeiner_et_al:LIPIcs.AFT.2026.29,
author = {Finkbeiner, Colin and Shaw, Connor and Almashaqbeh, Ghada},
title = {{When Does Being Selfish Pay Off? Temporal Composability and Profitability in Selfish Mining}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {29:1--29:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.29},
URN = {urn:nbn:de:0030-drops-278839},
doi = {10.4230/LIPIcs.AFT.2026.29},
annote = {Keywords: Bitcoin, Proof of work, Selfish mining, Temporal mining strategies}
}
Document
Optimal Reward Allocation via Proportional Splitting
Abstract
Following the publication of Bitcoin’s arguably most famous attack, selfish mining, various works have introduced mechanisms to enhance blockchain systems' game-theoretic resilience. The only proof-of-work reward rule with a Nash-equilibrium guarantee, FruitChains, demands reward finality on the order of days. The rules that settle in minutes have no such guarantee, and one of them, Reward Splitting, still outperforms FruitChains on most of the metrics that matter in deployment. This paper closes that gap between theory and practice.
We introduce FairChain, a two-level transformation for any proof-of-work Nakamoto-style protocol. At the protocol layer, FairChain records low-difficulty samples called workshares alongside blocks. At the reward layer, it applies Proportional Reward Splitting (PRS): each height’s reward is divided among the competing work objects in proportion to the intrinsic work behind them, with workshares supplying a fresh power estimate at every height. The fork-choice rule and block-production loop are left untouched, so the host chain’s security carries over unchanged. Workshares can be discarded once the corresponding rewards mature, leaving zero on-chain footprint.
We prove FairChain is a ρ-coalition-safe ε-Nash equilibrium for sufficiently large parameters, matching FruitChains in theory. To evaluate practical performance, we leverage Markov decision processes and compute the optimal adversarial policy under each utility function, rather than the gain of any one attack. At a six-block confirmation window, FairChain raises the deviation threshold to 38% of mining power and beats every mechanism in that framework on incentive compatibility, subversion gain (except FruitChains above 42%), and censorship susceptibility (except FruitChains below 25%). Our construction has been adopted by a live PoW blockchain, with sub-kilobyte per-block storage overhead in deployment.
Cite as
Lukas Aumayr, Zeta Avarikioti, Dimitris Karakostas, Karl Kreder, and Shreekara Shastry. Optimal Reward Allocation via Proportional Splitting. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 30:1-30:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{aumayr_et_al:LIPIcs.AFT.2026.30,
author = {Aumayr, Lukas and Avarikioti, Zeta and Karakostas, Dimitris and Kreder, Karl and Shastry, Shreekara},
title = {{Optimal Reward Allocation via Proportional Splitting}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {30:1--30:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.30},
URN = {urn:nbn:de:0030-drops-278848},
doi = {10.4230/LIPIcs.AFT.2026.30},
annote = {Keywords: blockchain, proof-of-work, fairness, game-theory, rewards}
}
Document
Friend or Foe? Anomalous Peers in Monero’s P2P Network
Abstract
Monero, the leading privacy-focused cryptocurrency, relies on a peer-to-peer (P2P) network to propagate transactions and blocks. Growing evidence suggests that non-standard nodes exist in the network, posing as honest nodes but are perhaps intended for monitoring the network and spying on other nodes. However, our understanding of the detection and analysis of anomalous peer behavior remains limited. This paper presents a systematic methodology for detecting anomalous peer behavior in P2P cryptocurrency networks, which we apply in a forensic case study of Monero’s network. We collected and analyzed over 240 hours of network traffic captured from five distinct vantage points worldwide. We further present a formal framework which allows us to analytically define and classify anomalous patterns in P2P cryptocurrency networks. Our detection methodology defines detection rules directly applicable to real-time monitoring. Our analysis reveals the presence of non-standard peers in the network where approximately 14.38% (1,877 of 13,050) of the observed peers exhibit anomalous behavior. Of these, at least 1,582 peers show patterns consistent with control by a single entity. These peers exhibit behavioral patterns consistent with a Sybil attack coupled with self-reinforcing peer list poisoning, which establishes the preconditions for degrading Monero’s privacy guarantees and undermining network decentralization. To support reproducibility and enable network operators to protect themselves, we release our examination pipeline to identify and block suspicious peers based on newly captured network traffic.
Cite as
Yannik Kopyciok, Stefan Schmid, and Friedhelm Victor. Friend or Foe? Anomalous Peers in Monero’s P2P Network. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 31:1-31:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{kopyciok_et_al:LIPIcs.AFT.2026.31,
author = {Kopyciok, Yannik and Schmid, Stefan and Victor, Friedhelm},
title = {{Friend or Foe? Anomalous Peers in Monero’s P2P Network}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {31:1--31:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.31},
URN = {urn:nbn:de:0030-drops-278858},
doi = {10.4230/LIPIcs.AFT.2026.31},
annote = {Keywords: network forensics, security, cryptocurrency networks}
}
Document
Who Plays to Earn? Detecting Bots in Web3 Games via On-Chain Transactions Analysis
Abstract
Bots in Web3 Play-to-Earn (P2E) games extract on-chain rewards at scale, accelerating token inflation and eroding the incentives that sustain legitimate participation. Existing defenses transfer poorly to this setting. Traditional game-bot detectors require proprietary server-side telemetry that is unavailable on permissionless chains, and blockchain-native detectors target DeFi behaviors whose footprints differ fundamentally from those of game automation; research specific to Web3 game bots remains scarce, and no public labeled dataset exists. We argue that the very economic asymmetry that makes P2E automation profitable also exposes it, because the temporal, topological, financial, and behavioral regularities that bots cannot disguise without forfeiting their efficiency advantage remain observable from public on-chain transactions alone. Building on this insight, we propose a cross-game, cross-chain detection framework that models player activity as a heterogeneous temporal transaction graph over a unified five-type edge vocabulary, extracts 32 chain-agnostic behavioral features, and classifies accounts through a dual-branch encoder fusing a typed-edge graph attention network (GAT) with a gated recurrent unit (GRU)-attention sequence model, bootstrapped by graph-contrastive pre-training. To support evaluation, we further release the first multi-game labeled bot dataset, spanning three P2E titles on three heterogeneous chains with 57,879 accounts and 3,551 confirmed bots. On the joint test split, the framework attains F1 = 94.39%, AUC = 99.92%, and AP = 98.90%, with a sharply bimodal score distribution and stable performance across a wide range of decision thresholds.
Cite as
Woncheol Jeong, Sohee Choi, and Jiwon Yoon. Who Plays to Earn? Detecting Bots in Web3 Games via On-Chain Transactions Analysis. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 32:1-32:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{jeong_et_al:LIPIcs.AFT.2026.32,
author = {Jeong, Woncheol and Choi, Sohee and Yoon, Jiwon},
title = {{Who Plays to Earn? Detecting Bots in Web3 Games via On-Chain Transactions Analysis}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {32:1--32:22},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.32},
URN = {urn:nbn:de:0030-drops-278867},
doi = {10.4230/LIPIcs.AFT.2026.32},
annote = {Keywords: Bot detection, Web3 gaming, Play-to-Earn, on-chain behavioral analysis, transaction graph analysis, heterogeneous graph neural network}
}
Document
Pre-Model Representation Failures in GNN-Based Smart Contract Vulnerability Detection
Abstract
This paper is a failure analysis of the representation layer underlying GNN-based smart contract vulnerability detectors. These systems convert source code into graphs before any learning takes place; if the graph fails to capture the code’s semantics, no model improvement can compensate.
We investigate GNNSCVulDetector and identify four failures. First, structurally different contracts produce byte-for-byte identical graphs, constituting a concrete evasion attack. Second, graph construction is governed by a hardcoded 47-entry variable whitelist (including one duplicate entry), which constrains what the extractor can recognise. As a consequence, identical vulnerabilities with different variable names produce inconsistent graphs, graph quality degrades as naming diverges from the whitelist, and when no entry matches the pipeline produces structural output not grounded in source variables. Third, the C node (the graph element representing the external caller that triggers a reentrancy attack) is absent from even the most canonical vulnerable contract in the literature. Fourth, a controlled experiment confirms this as a direct misclassification: a fully exploitable contract is labelled safe because the C → W edge is never constructed.
All four failures are demonstrated experimentally. Current accuracy figures in the literature are measured under conditions that do not expose these failures. We demonstrate one confirmed case of misclassification caused directly by a representation-layer failure; the prevalence of such failures in real-world contract populations remains an open empirical question.
Cite as
Birindwa Prisca Hondi, Chinonso Philip Nwishienyi, Charity Wanja Mwaura, Alia Teto, and Jema David Ndibwile. Pre-Model Representation Failures in GNN-Based Smart Contract Vulnerability Detection. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 33:1-33:12, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{hondi_et_al:LIPIcs.AFT.2026.33,
author = {Hondi, Birindwa Prisca and Nwishienyi, Chinonso Philip and Mwaura, Charity Wanja and Teto, Alia and Ndibwile, Jema David},
title = {{Pre-Model Representation Failures in GNN-Based Smart Contract Vulnerability Detection}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {33:1--33:12},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.33},
URN = {urn:nbn:de:0030-drops-278872},
doi = {10.4230/LIPIcs.AFT.2026.33},
annote = {Keywords: Smart contract security, graph neural networks, vulnerability detection, DeFi, reentrancy, feature extraction}
}
Document
EVM Workloads in the Wild: Evidence for Multi-Dimensional Gas Metering, State Growth, Delayed Execution, and Parallelism
Abstract
Gas metering on EVM-compatible blockchains assumes that execution conditions are stable: that the resource mix is constant enough to justify collapsing execution costs into a single scalar with fixed relative prices, and that state drift between submission and execution time does not materially alter a transaction’s outcome. We measure the extent to which this assumption fails.
We present a trace-level measurement study of EVM workloads on Ethereum (L1) and Base (L2) throughout 2025, sampling 3{,}000 blocks per day per chain. We decompose each transaction into opcode-level execution gas, intrinsic gas, refunds, and persistent state deltas including storage slots, contract bytecode, and account state. To measure state sensitivity, we re-execute transactions sampled during September 2025 on progressively older blockchain states and record how gas usage, execution outcomes, and storage access patterns change.
We find the resource mix to be far from stable: on Base, storage reads and compute account for 29.2% and 24.3% of execution gas, while Ethereum devotes 34.9% to storage writes. The mix is not stable on the same chain either: Ethereum’s gas limit doubling during 2025 shifted its resource profile measurably toward more compute-heavy, Base-like patterns. Base also exhibits a higher fraction of cold storage reads at 49.7%, compared to 39.6% on Ethereum. Persistent state growth, a permanent cost priced as a transient one, reaches 435 GB on Base versus 30 GB on Ethereum, with different composition.
We further find that execution outcomes are equally unstable: gas estimates vary across nearby historical states for 46.0% of transactions on Base, compared to 13.9% on Ethereum, with especially high sensitivity for MEV and DeFi activity. Storage access patterns also diverge across execution states, limiting the effectiveness of access lists and complicating parallel execution.
Our measurements provide an empirical foundation for multi-dimensional gas metering and explicit pricing of state growth. They show that state-sensitive execution behavior complicates workload estimation and transaction parameterization, directly affecting the predictability of transactions' execution and user experience.
Cite as
Lioba Heimbach, Kushal Babel, and Jason Milionis. EVM Workloads in the Wild: Evidence for Multi-Dimensional Gas Metering, State Growth, Delayed Execution, and Parallelism. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 34:1-34:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{heimbach_et_al:LIPIcs.AFT.2026.34,
author = {Heimbach, Lioba and Babel, Kushal and Milionis, Jason},
title = {{EVM Workloads in the Wild: Evidence for Multi-Dimensional Gas Metering, State Growth, Delayed Execution, and Parallelism}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {34:1--34:24},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.34},
URN = {urn:nbn:de:0030-drops-278883},
doi = {10.4230/LIPIcs.AFT.2026.34},
annote = {Keywords: Ethereum, EVM, gas metering, state growth, workload analysis, Layer-2}
}
Document
Price Elasticity of Gas Demand on L1 and L2: Evidence from Ethereum and Arbitrum
Abstract
We estimate the causal price elasticity of gas demand on Ethereum mainnet (L1) and Arbitrum One (L2), a quantity necessary for calibrating fee mechanism simulations, evaluating resource pricing reforms, and explaining observed usage patterns. A two-way fixed effects panel regression instrumented by each wallet’s own lagged base fee removes the congestion-driven endogeneity that causes naive regressions to substantially underestimate demand sensitivity. On Ethereum mainnet (full year 2025), the pooled IV elasticity is -0.006^{***}, near-inelastic: a 10% fee increase reduces total gas demand by approximately 0.06%. On Arbitrum One (October 2025-April 2026), the pooled IV elasticity is -0.036^{**}. Both chains are inelastic in the aggregate, with L2 measurably more responsive than L1. A per-resource decomposition of L2 demand reveals elasticities ranging from modestly elastic computation (-0.027^{*}) to -0.27^{***} for refunds, with storage growth (-0.15^{***}) and calldata (-0.06^{*}) in between. Behavioral clustering identifies always-on protocol wallets as near-inelastic and high-volume operators as substantially more responsive, with cluster-level elasticities up to roughly 6× the pooled estimate. These results establish an empirical foundation for downstream simulations and for evaluating fee mechanism designs.
Cite as
Pranay Anchuri and Akaki Mamageishvili. Price Elasticity of Gas Demand on L1 and L2: Evidence from Ethereum and Arbitrum. In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 35:1-35:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{anchuri_et_al:LIPIcs.AFT.2026.35,
author = {Anchuri, Pranay and Mamageishvili, Akaki},
title = {{Price Elasticity of Gas Demand on L1 and L2: Evidence from Ethereum and Arbitrum}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {35:1--35:23},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.35},
URN = {urn:nbn:de:0030-drops-278895},
doi = {10.4230/LIPIcs.AFT.2026.35},
annote = {Keywords: gas pricing, demand elasticity, instrumental variables, panel data, fixed effects, Arbitrum, Ethereum, transaction fee mechanism}
}
Document
Extended Abstract
Who Loses and Why? Market Microstructure of Perpetual Futures (Extended Abstract)
Abstract
This extended abstract summarizes the essence of [Ruizhe Jia et al., 2026], which asks who loses money in perpetual-futures trading, and why. We study Hyperliquid, a leading decentralized perpetual-futures venue, using the complete on-chain record of orders and trades from March 27, 2025 through June 30, 2026 for its ten most actively traded contracts. We classify wallets into algorithmic market makers, front-end traders, and algorithmic takers; front-end traders trade manually through the venue’s interface, and we interpret them as predominantly retail. For each group we then measure profit and loss trade by trade, valuing every trade against the midprice two hours later and subtracting the fees paid. On this measure front-end traders lose 1.11billion, market makers gain $208 million, and algorithmic takers approximately break even. Three channels carry the transfer and account for the whole of it. The first is voluntary trading. Front-end traders demand immediacy, placing large aggressive orders whose size scales little with displayed liquidity, and so pay the highest execution costs; favorable post-trade price movement and maker income offset part of that cost. The second is forced exits. Leverage converts adverse price moves into forced liquidations, which exit at prices far worse than any voluntary trade, and auto-deleveraging returns only part of the loss. The third is fees. Front-end traders cross the spread on most of their volume and sit in the highest-fee tiers, and so pay most of the venue’s fees. Post-trade price impact is organized by trade purpose, though group differences persist within each purpose category. These results identify immediacy, forced exits, and fees as the principal channels of wealth transfer in decentralized perpetual-futures markets.
Cite as
Ruizhe Jia, Ciamac C. Moallemi, Shouqiao Wang, and Xinmeng Zeng. Who Loses and Why? Market Microstructure of Perpetual Futures (Extended Abstract). In 8th Conference on Advances in Financial Technologies (AFT 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 395, pp. 36:1-36:3, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)
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@InProceedings{jia_et_al:LIPIcs.AFT.2026.36,
author = {Jia, Ruizhe and Moallemi, Ciamac C. and Wang, Shouqiao and Zeng, Xinmeng},
title = {{Who Loses and Why? Market Microstructure of Perpetual Futures}},
booktitle = {8th Conference on Advances in Financial Technologies (AFT 2026)},
pages = {36:1--36:3},
series = {Leibniz International Proceedings in Informatics (LIPIcs)},
ISBN = {978-3-95977-451-2},
ISSN = {1868-8969},
year = {2026},
volume = {395},
editor = {Kiayias, Aggelos and Kyropoulou, Maria},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.36},
URN = {urn:nbn:de:0030-drops-278900},
doi = {10.4230/LIPIcs.AFT.2026.36},
annote = {Keywords: Perpetual futures, cryptocurrency derivatives, decentralized exchanges, on-chain data, retail trading, market microstructure, execution costs, liquidations}
}