Volume
OASIcs, Volume 97
3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)
Publication Details
- published at: 2022-03-18
- Publisher: Schloss Dagstuhl – Leibniz-Zentrum für Informatik
- ISBN: 978-3-95977-220-4
- DBLP: db/conf/tokenomics/tokenomics2021
Access Numbers
- Detailed Access Statistics available here
-
Total Document Accesses (updated on a weekly basis):
0PDF Downloads
Documents
No documents found matching your filter selection.
Document
Complete Volume
OASIcs, Volume 97, Tokenomics 2021, Complete Volume
Abstract
OASIcs, Volume 97, Tokenomics 2021, Complete Volume
Cite as
3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 1-124, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@Proceedings{gramoli_et_al:OASIcs.Tokenomics.2021,
title = {{OASIcs, Volume 97, Tokenomics 2021, Complete Volume}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {1--124},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021},
URN = {urn:nbn:de:0030-drops-158965},
doi = {10.4230/OASIcs.Tokenomics.2021},
annote = {Keywords: OASIcs, Volume 97, Tokenomics 2021, Complete Volume}
}
Document
Front Matter
Front Matter, Table of Contents, Preface, Conference Organization
Abstract
Front Matter, Table of Contents, Preface, Conference Organization
Cite as
3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 0:i-0:x, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{gramoli_et_al:OASIcs.Tokenomics.2021.0,
author = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
title = {{Front Matter, Table of Contents, Preface, Conference Organization}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {0:i--0:x},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.0},
URN = {urn:nbn:de:0030-drops-158975},
doi = {10.4230/OASIcs.Tokenomics.2021.0},
annote = {Keywords: Front Matter, Table of Contents, Preface, Conference Organization}
}
Document
Invited Talk
Distributed Computing Meets Game Theory: Fault Tolerance and Implementation with Cheap Talk (Invited Talk)
Abstract
Traditionally, work in distributed computing has divided the agents into "good guys" and "bad guys". The good guys follow the protocol; the bad guys do everything in their power to make sure it does not work. By way of contrast, game theory has focused on "rational" agents, who try to maximize their utilities. Here I try to combine these viewpoints. Specifically, following the work of Abraham et al. [I. Abraham et al., 2006], I consider (k,t)-robust protocols/strategies, which tolerate coalitions of rational players of size up to k and up to t malicious players. I focus in particular on the problem that economists have called implementing a mediator. That is, can the players in the system, just talking among themselves (using what economists call "cheap talk") simulate the effects of the mediator (see, e.g., [I. Barany, 1992; E. Ben-Porath, 2003; Forges, 1990; D. Gerardi, 2004; Y. Heller, 2005; A. Urbano and J. E. Vila, 2002; A. Urbano and J. E. Vila, 2004]). In computer science, this essentially amounts to multiparty computation [O. Goldreich et al., 1987; A. Shamir et al., 1981; A. Yao, 1982]. Ideas from cryptography and distributed computing allow us to prove results on how many agents are required to implement a (k,t)-robust mediator just using cheap talk. These results subsume (and, in some cases, correct) results from the game theory literature.
The results of Abraham et al. [I. Abraham et al., 2006] were proved for what are called synchronous systems in the distributed computing community; this is also the case for all the results in the economics literature cited above. In synchronous systems, communication proceeds in atomic rounds, and all messages sent during round r are received by round r + 1. But many systems in the real world are asynchronous. In an asynchronous setting, there are no rounds; messages sent by the players may take arbitrarily long to get to their recipients. Markets and the internet are best viewed as asynchronous. Blockchain implementations assume partial synchrony, where there is an upper bound on how long messages take to arrive. The partial synchronous setting already shows some of the difficulty of moving away from synchrony: An agent i can wait to take its action until it receives a message from j (on which its action can depend). This cannot happen in a synchronous setting. Abraham, Dolev, Geffner, abnd Halpern [I. Abraham et al., 2019] extend the results on implementing mediators to the asynchronous setting.
Cite as
Joseph Y. Halpern. Distributed Computing Meets Game Theory: Fault Tolerance and Implementation with Cheap Talk (Invited Talk). In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 1:1-1:2, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{halpern:OASIcs.Tokenomics.2021.1,
author = {Halpern, Joseph Y.},
title = {{Distributed Computing Meets Game Theory: Fault Tolerance and Implementation with Cheap Talk}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {1:1--1:2},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.1},
URN = {urn:nbn:de:0030-drops-158981},
doi = {10.4230/OASIcs.Tokenomics.2021.1},
annote = {Keywords: robust equilibrium, implementing mediators, asynchronous systems}
}
Document
General Congestion Attack on HTLC-Based Payment Channel Networks
Abstract
Payment Channel Networks (PCNs) have been a promising approach to scale blockchains. However, PCNs have limited liquidity: large-amount or multi-hop payments may fail. The major threat of PCNs liquidity is payment griefing, where the adversary who acts as the payee keeps withholding the payment, so that coins involved in the payment cannot be used for routing other payments before the payment expires. Payment griefing gives adversaries a chance to launch the congestion attack, where the adversary griefs a large number of payments and paralyses the entire PCN. Understanding congestion attacks, including their strategies and impact, is crucial for designing PCNs with better liquidity guarantees. However, existing research has only focused on the specific attacking strategies and specific aspects of their impact on PCNs.
We fill this gap by studying the general congestion attack. Compared to existing attack strategies, in our framework each step serves an orthogonal purpose and is customisable, allowing the adversary to focus on different aspects of the liquidity. To evaluate the attack’s impact, we propose a generic method of quantifying PCNs' liquidity and effectiveness of the congestion attacks. We evaluate our general congestion attacks on Bitcoin’s Lightning Network, and show that with direct channels to 1.5% richest nodes, and ∼ 0.0096 BTC of cost, the adversary can launch a congestion attack that locks 47% (∼280 BTC) coins in the network; reduces success rate of payments by 16.0%∼60.0%; increases fee of payments by 4.5%∼16.0%; increases average attempts of payments by 42.0%∼115.3%; and increase the number of bankruptcy nodes (i.e., nodes with insufficient balance for making normal-size payments) by 26.6%∼109.4%, where the amounts of payments range from 0.001 to 0.019 BTC.
Cite as
Zhichun Lu, Runchao Han, and Jiangshan Yu. General Congestion Attack on HTLC-Based Payment Channel Networks. In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 2:1-2:15, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{lu_et_al:OASIcs.Tokenomics.2021.2,
author = {Lu, Zhichun and Han, Runchao and Yu, Jiangshan},
title = {{General Congestion Attack on HTLC-Based Payment Channel Networks}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {2:1--2:15},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.2},
URN = {urn:nbn:de:0030-drops-158990},
doi = {10.4230/OASIcs.Tokenomics.2021.2},
annote = {Keywords: Blockchain, PCN, Congestion}
}
Document
Tuning PoW with Hybrid Expenditure
Abstract
Proof of Work (PoW) is a Sybil-deterrence security mechanism. It introduces an external cost to system participation by requiring computational effort to perform actions. However, since its inception, a central challenge was to tune this cost. Initial designs for deterring spam email and DoS attacks applied overhead equally to honest participants and attackers. Requiring too little effort does not deter attacks, whereas too much encumbers honest participation. This might be the reason it was never widely adopted.
Nakamoto overcame this trade-off in Bitcoin by distinguishing desired from malicious behavior and introducing internal rewards for the former. This mechanism gained popularity in securing permissionless cryptocurrencies, using virtual internally-minted tokens for rewards. However, in existing blockchain protocols the internal rewards directly compensate users for (almost) the same value of external expenses. Thus, as the token value soars, so does the PoW expenditure. Bitcoin PoW, for example, already expends as much electricity as Colombia or Switzerland. This amount of resource-guzzling is unsustainable, and hinders even wider adoption of these systems.
As such, a prominent alternative named Proof of Stake (PoS) replaces the expenditure requirement with token possession. However, PoS is shun by many cryptocurrency projects, as it is only secure under qualitatively-different assumptions, and the resultant systems are not permissionless.
In this work we present Hybrid Expenditure Blockchain (HEB), a novel PoW mechanism. HEB is a generalization of Nakamoto’s protocol that enables tuning the external expenditure by introducing a complementary internal-expenditure mechanism. Thus, for the first time, HEB decouples external expenditure from the reward value.
We show a practical parameter choice by which HEB requires significantly less external consumption compare to Nakamoto’s protocol, its resilience against rational attackers is similar, and it retains the decentralized and permissionless nature of the system. Taking the Bitcoin ecosystem as an example, HEB cuts the electricity consumption by half.
Cite as
Itay Tsabary, Alexander Spiegelman, and Ittay Eyal. Tuning PoW with Hybrid Expenditure. In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 3:1-3:17, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{tsabary_et_al:OASIcs.Tokenomics.2021.3,
author = {Tsabary, Itay and Spiegelman, Alexander and Eyal, Ittay},
title = {{Tuning PoW with Hybrid Expenditure}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {3:1--3:17},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.3},
URN = {urn:nbn:de:0030-drops-159008},
doi = {10.4230/OASIcs.Tokenomics.2021.3},
annote = {Keywords: Blockchain, Proof of work, Cryptocurrency, Environmental impact}
}
Document
On Cryptocurrency Wallet Design
Abstract
The security of cryptocurrency and decentralized blockchain-maintained assets relies on their owners safeguarding secrets, typically cryptographic keys. This applies equally to individuals keeping daily-spending amounts and to large asset management companies. Loss of keys and attackers gaining control of keys resulted in numerous losses of funds.
The security of individual keys was widely studied with practical solutions available, from mnemonic phrases to dedicated hardware. There are also techniques for securing funds by requiring combinations of multiple keys. However, to the best of our knowledge, a crucial question was never addressed: How is wallet security affected by the number of keys, their types, and how they are combined? This is the focus of this work.
We present a model where each key has certain probabilities for being safe, lost, leaked, or stolen (available only to an attacker). The number of possible wallets for a given number of keys is the Dedekind number, prohibiting an exhaustive search with many keys. Nonetheless, we bound optimal-wallet failure probabilities with an evolutionary algorithm.
We evaluate the security (complement of failure probability) of wallets based on the number and types of keys used. Our analysis covers a wide range of settings and reveals several surprises. The failure probability general trend drops exponentially with the number of keys, but has a strong dependency on its parity. In many cases, but not always, heterogeneous keys (not all with the same fault probabilities) allow for superior wallets than homogeneous keys. Nonetheless, in the case of 3 keys, the common practice of requiring any pair is optimal in many settings.
Our formulation of the problem and initial results reveal several open questions, from user studies of key fault probabilities to finding optimal wallets with very large numbers of keys. But they also have an immediate practical outcome, informing cryptocurrency users on optimal wallet design.
Cite as
Ittay Eyal. On Cryptocurrency Wallet Design. In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 4:1-4:16, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{eyal:OASIcs.Tokenomics.2021.4,
author = {Eyal, Ittay},
title = {{On Cryptocurrency Wallet Design}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {4:1--4:16},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.4},
URN = {urn:nbn:de:0030-drops-159012},
doi = {10.4230/OASIcs.Tokenomics.2021.4},
annote = {Keywords: cryptocurrency, wallet, key-management, authentication}
}
Document
Secure Computation with Non-Equivalent Penalties in Constant Rounds
Abstract
It is known that Bitcoin enables to achieve fairness in secure computation by imposing a monetary penalty on adversarial parties. This functionality is called secure computation with penalties. Bentov and Kumaresan (Crypto 2014) showed that it could be realized with O(n) rounds and O(n) broadcasts for any function, where n is the number of parties. Kumaresan and Bentov (CCS 2014) posed an open question: "Is it possible to design secure computation with penalties that needs only O(1) rounds and O(n) broadcasts?" In this work, we introduce secure computation with non-equivalent penalties, and design a protocol achieving this functionality with O(1) rounds and O(n) broadcasts only. The new functionality is the same as secure computation with penalties except that every honest party receives more than a predetermined amount of compensation while the previous one requires that every honest party receives the same amount of compensation. In particular, both are the same if all parties behave honestly. Thus, our result gives a partial answer to the open problem with a slight and natural modification of functionality.
Cite as
Takeshi Nakai and Kazumasa Shinagawa. Secure Computation with Non-Equivalent Penalties in Constant Rounds. In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 5:1-5:16, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{nakai_et_al:OASIcs.Tokenomics.2021.5,
author = {Nakai, Takeshi and Shinagawa, Kazumasa},
title = {{Secure Computation with Non-Equivalent Penalties in Constant Rounds}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {5:1--5:16},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.5},
URN = {urn:nbn:de:0030-drops-159026},
doi = {10.4230/OASIcs.Tokenomics.2021.5},
annote = {Keywords: Secure computation, Fairness, Bitcoin}
}
Document
Invited Talk
Dynamic Posted-Price Mechanisms for the Blockchain Transaction Fee Market (Invited Talk)
Abstract
In recent years, prominent blockchain systems such as Bitcoin and Ethereum have experienced explosive growth in transaction volume, leading to frequent surges in demand for limited block space and causing transaction fees to fluctuate by orders of magnitude. Existing systems sell space using first-price auctions; however, users find it difficult to estimate how much they need to bid in order to get their transactions accepted onto the chain. If they bid too low, their transactions can have long confirmation times. If they bid too high, they pay larger fees than necessary.
In light of these issues, new transaction fee mechanisms have been proposed, most notably EIP-1559, aiming to provide better usability. EIP-1559 is a history-dependent mechanism that relies on block utilization to adjust a base fee. We propose an alternative design - a dynamic posted-price mechanism - which uses not only block utilization but also observable bids from past blocks to compute a posted price for subsequent blocks. We show its potential to reduce price volatility by providing examples for which the prices of EIP-1559 are unstable while the prices of the proposed mechanism are stable. More generally, whenever the demand for the blockchain stabilizes, we ask if our mechanism is able to converge to a stable state. Our main result provides sufficient conditions in a probabilistic setting for which the proposed mechanism is approximately welfare optimal and the prices are stable. Our main technical contribution towards establishing stability is an iterative algorithm that, given oracle access to a Lipschitz continuous and strictly concave function f, converges to a fixed point of f.
Cite as
Matheus V. X. Ferreira, Daniel J. Moroz, David C. Parkes, and Mitchell Stern. Dynamic Posted-Price Mechanisms for the Blockchain Transaction Fee Market (Invited Talk). In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, p. 6:1, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{ferreira_et_al:OASIcs.Tokenomics.2021.6,
author = {Ferreira, Matheus V. X. and Moroz, Daniel J. and Parkes, David C. and Stern, Mitchell},
title = {{Dynamic Posted-Price Mechanisms for the Blockchain Transaction Fee Market}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {6:1--6:1},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.6},
URN = {urn:nbn:de:0030-drops-159039},
doi = {10.4230/OASIcs.Tokenomics.2021.6},
annote = {Keywords: Blockchain, Posted-price mechanism, Credible, Incentive compatibility, Transaction fee market, first-price auction, EIP-1559}
}
Document
Extended Abstract
Best Before? Expiring Central Bank Digital Currency and Loss Recovery (Extended Abstract)
Abstract
An important feature of physical cash payments is resilience, due to their independence of power outages or network coverage. Many central banks are exploring issuing digital cash substitutes with similar offline payment functionality. Such substitutes could incorporate novel features making them more desirable than physical cash. This paper considers introducing an expiry date for offline digital currency balances to automate personal loss recovery. We show this functionality could increase consumer demand for digital cash, with the time to expiration playing a key role. The optimal time to expiration should have short wait time to get lost money reimbursed but leave enough time for agents to deposit received offline balances. Setting the time to expiration a bit too long has minor impact on welfare but setting it too short dramatically reduce welfare. If the offline device provides information about past transactions to the central bank, the accuracy of loss recovery can be improved but welfare can decrease.
Cite as
Charles M. Kahn, Maarten R.C. van Oordt, and Yu Zhu. Best Before? Expiring Central Bank Digital Currency and Loss Recovery (Extended Abstract). In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, p. 7:1, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{kahn_et_al:OASIcs.Tokenomics.2021.7,
author = {Kahn, Charles M. and van Oordt, Maarten R.C. and Zhu, Yu},
title = {{Best Before? Expiring Central Bank Digital Currency and Loss Recovery}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {7:1--7:1},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.7},
URN = {urn:nbn:de:0030-drops-159040},
doi = {10.4230/OASIcs.Tokenomics.2021.7},
annote = {Keywords: Central Bank Digital Currency, Design, Offline Payments, Operational Resilience, Financial Inclusion}
}
Document
Optimal Design of Tokenized Markets
Abstract
Trades in today’s financial system are inherently subject to settlement uncertainty. This paper explores tokenization as a potential technological solution. A token system, by enabling programmability of assets, can be designed to eradicate settlement uncertainty. We study the allocations achieved in a decentralized market with either the legacy settlement system or a token system. Tokenization can improve efficiency in markets subject to a limited commitment problem. However, it also materially alters the information environment, which in turn aggravates a hold-up problem. This limits potential gains from resolving settlement uncertainty, particularly for markets that depend on intermediaries.
Cite as
Michael Junho Lee, Antoine Martin, and Robert M. Townsend. Optimal Design of Tokenized Markets. In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, p. 8:1, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{lee_et_al:OASIcs.Tokenomics.2021.8,
author = {Lee, Michael Junho and Martin, Antoine and Townsend, Robert M.},
title = {{Optimal Design of Tokenized Markets}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {8:1--8:1},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.8},
URN = {urn:nbn:de:0030-drops-159051},
doi = {10.4230/OASIcs.Tokenomics.2021.8},
annote = {Keywords: Tokenization, programmability, settlement uncertainty, asymmetric information}
}
Document
Extended Abstract
To Infinity and Beyond: Financing Platforms with Uncapped Crypto Tokens (Extended Abstract)
Abstract
Initial Coin Offerings (ICOs) are an emerging form of crowdfunding for blockchain-based startups. While ICO design varies greatly in practice, many service-based platforms (e.g., Ethereum), use "uncapped" structures that forego limits on token supply, subjecting early investors to dilution risk. In this paper, we examine the conditions under which such ICOs are optimal and provide guidance for their design. Despite their popularity in practice, uncapped ICOs are understudied and not as well understood as their capped counterparts. We model game-theoretic interactions among various stakeholders in an infinite-horizon setting with network effects, taking account of operational details. We show that uncapped ICOs weakly dominate capped ones in the context of service platforms. In terms of design, a platform commission and regulation are generally "substitutes" when it comes to overcoming moral hazard, but can also be combined to make ICOs more accessible, especially for platforms with high initial setup costs. ICO accessibility can also be increased by employing a dual token offering (security & transaction tokens), at the cost of reduced expected profit. The paper provides a theoretical underpinning for the use of uncapped ICOs in practice. At a high level, it shows that ICOs succeed more easily in the presence of regulation, and platforms with low (high) setup costs should preferably issue utility (dual token) type ICOs.
Cite as
Rowena Gan, Gerry Tsoukalas, and Serguei Netessine. To Infinity and Beyond: Financing Platforms with Uncapped Crypto Tokens (Extended Abstract). In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, p. 9:1, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{gan_et_al:OASIcs.Tokenomics.2021.9,
author = {Gan, Rowena and Tsoukalas, Gerry and Netessine, Serguei},
title = {{To Infinity and Beyond: Financing Platforms with Uncapped Crypto Tokens}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {9:1--9:1},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.9},
URN = {urn:nbn:de:0030-drops-159066},
doi = {10.4230/OASIcs.Tokenomics.2021.9},
annote = {Keywords: Blockchain, Crowdfunding, Cryptocurrency, Dual Token Issuance, Initial Coin Offerings, ICOs, Moral Hazard, Stable Coins, Security Token Offerings, STOs}
}
Document
Extended Abstract
Detecting and Quantifying Crypto Wash Trading (Extended Abstract)
Abstract
We introduce systematic tests exploiting robust statistical and behavioral patterns in trading to detect fake transactions on 29 cryptocurrency exchanges. Regulated exchanges feature patterns consistently observed in financial markets and nature; abnormal first-significant-digit distributions, size rounding, and transaction tail distributions on unregulated exchanges reveal rampant manipulations unlikely driven by strategy or exchange heterogeneity. We quantify the wash trading on each unregulated exchange, which averaged over 70% of the reported volume. We further document how these fabricated volumes (trillions of dollars annually) improve exchange ranking, temporarily distort prices, and relate to exchange characteristics (e.g., age and userbase), market conditions, and regulation.
Cite as
Lin William Cong, Xi Li, Ke Tang, and Yang Yang. Detecting and Quantifying Crypto Wash Trading (Extended Abstract). In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 10:1-10:6, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{cong_et_al:OASIcs.Tokenomics.2021.10,
author = {Cong, Lin William and Li, Xi and Tang, Ke and Yang, Yang},
title = {{Detecting and Quantifying Crypto Wash Trading}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {10:1--10:6},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.10},
URN = {urn:nbn:de:0030-drops-159072},
doi = {10.4230/OASIcs.Tokenomics.2021.10},
annote = {Keywords: Bitcoin, Cryptocurrency, FinTech, Forensic Finance, Fraud Detection, Regulation}
}
Document
Fundamentals of the MakerDAO Governance Token
Abstract
We study the fundamentals governing the price of the MakerDAO governance token MKR. Governance tokens are minted in response to liquidations, and burned in response to growth in the system surplus. MKR tokens appreciate with an increase in system surplus and depreciate with a rise in systemic risk due to DAI liquidation spirals. We discuss incentive compatibility conditions that need to be satisfied for the protocol to maintain the DAI stablecoin peg.
Cite as
Roman Kozhan and Ganesh Viswanath-Natraj. Fundamentals of the MakerDAO Governance Token. In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 11:1-11:5, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{kozhan_et_al:OASIcs.Tokenomics.2021.11,
author = {Kozhan, Roman and Viswanath-Natraj, Ganesh},
title = {{Fundamentals of the MakerDAO Governance Token}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {11:1--11:5},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.11},
URN = {urn:nbn:de:0030-drops-159082},
doi = {10.4230/OASIcs.Tokenomics.2021.11},
annote = {Keywords: Cryptocurrency, monetary policy, stablecoins, governance token}
}
Document
Invited Talk
Blockchain and Privacy (Invited Talk)
Abstract
The unique value proposition of ’smart contracts' based on blockchain technology is the creation of a permanent public record of agreed-upon transactions that cannot be changed retroactively. Though this is attractive in terms of reducing the potential for fraud, a person entering into a smart contract pre-commits both their current self and their future selves, no matter what changes occur to them or to their circumstances. The advantages of such pre-commitments can be substantial, but even in an age of increasing adoption of distributed ledger technologies, self-reinvention remains important. From a surveillance perspective, it is important to prevent governments from reliably associating a particular cryptoasset transaction with a particular person. For individuals, it is important to preserve the ability to assume new identities both formally and informally. This presentation will present an expanded and refined understanding of what it means for a blockchain use case to "protect privacy," and in particular, how such use cases can encourage a notion of personal identity that is inflexible and matches poorly with individuals' notions regarding their identities. In addition I discuss how privacy regulation may itself shape the development of blockchain.
Cite as
Catherine Tucker. Blockchain and Privacy (Invited Talk). In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, p. 12:1, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{tucker:OASIcs.Tokenomics.2021.12,
author = {Tucker, Catherine},
title = {{Blockchain and Privacy}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {12:1--12:1},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.12},
URN = {urn:nbn:de:0030-drops-159093},
doi = {10.4230/OASIcs.Tokenomics.2021.12},
annote = {Keywords: Blockchain, Privacy}
}
Document
Presentation and Publication: Loss and Slippage in Networks of Automated Market Makers
Abstract
Automated market makers (AMMs) are smart contracts that automatically trade electronic assets according to a mathematical formula. This paper investigates how an AMM’s formula affects the interests of liquidity providers, who endow the AMM with assets, and traders, who exchange one asset for another at the AMM’s rates. Linear slippage measures how a trade’s size affects the trader’s return, angular slippage measures how a trade’s size affects the subsequent market price, divergence loss measures the opportunity cost of providers' investments, and load balances the costs to traders and providers. We give formal definitions for these costs, show that they obey certain conservation laws: these costs can be shifted around but never fully eliminated. We analyze how these costs behave under composition, when simple individual AMMs are linked to form more complex networks of AMMs.
Cite as
Daniel Engel and Maurice Herlihy. Presentation and Publication: Loss and Slippage in Networks of Automated Market Makers. In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 13:1-13:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
Copy BibTex To Clipboard
@InProceedings{engel_et_al:OASIcs.Tokenomics.2021.13,
author = {Engel, Daniel and Herlihy, Maurice},
title = {{Presentation and Publication: Loss and Slippage in Networks of Automated Market Makers}},
booktitle = {3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
pages = {13:1--13:23},
series = {Open Access Series in Informatics (OASIcs)},
ISBN = {978-3-95977-220-4},
ISSN = {2190-6807},
year = {2022},
volume = {97},
editor = {Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
publisher = {Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
address = {Dagstuhl, Germany},
URL = {https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2021.13},
URN = {urn:nbn:de:0030-drops-159103},
doi = {10.4230/OASIcs.Tokenomics.2021.13},
annote = {Keywords: Decentralized Finance, AMM, Uniswap}
}