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DOI: 10.4230/LIPIcs.AFT.2024.26

Competitive Policies for Online Collateral Maintenance

Authors: Ghada Almashaqbeh, Sixia Chen, and Alexander Russell

Published in: LIPIcs, Volume 316, 6th Conference on Advances in Financial Technologies (AFT 2024)

Abstract

Layer-two blockchain protocols emerged to address scalability issues related to fees, storage cost, and confirmation delay of on-chain transactions. They aggregate off-chain transactions into fewer on-chain ones, thus offering immediate settlement and reduced transaction fees. To preserve security of the underlying ledger, layer-two protocols often work in a collateralized model; resources are committed on-chain to backup off-chain activities. A fundamental challenge that arises in this setup is determining a policy for establishing, committing, and replenishing the collateral in a way that maximizes the value of settled transactions. In this paper, we study this problem under two settings that model collateralized layer-two protocols. The first is a general model in which a party has an on-chain collateral C with a policy to decide on whether to settle or discard each incoming transaction. The policy also specifies when to replenish C based on the remaining collateral value. The second model considers a discrete setup in which C is divided among k wallets, each of which is of size C/k, such that when a wallet is full, and so cannot settle any incoming transactions, it will be replenished. We devise several online policies for these models, and show how competitive they are compared to optimal (offline) policies that have full knowledge of the incoming transaction stream. To the best of our knowledge, we are the first to study and formulate online competitive policies for collateral and wallet management in the blockchain setting.

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Ghada Almashaqbeh, Sixia Chen, and Alexander Russell. Competitive Policies for Online Collateral Maintenance. In 6th Conference on Advances in Financial Technologies (AFT 2024). Leibniz International Proceedings in Informatics (LIPIcs), Volume 316, pp. 26:1-26:16, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2024)

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@InProceedings{almashaqbeh_et_al:LIPIcs.AFT.2024.26,
  author =	{Almashaqbeh, Ghada and Chen, Sixia and Russell, Alexander},
  title =	{{Competitive Policies for Online Collateral Maintenance}},
  booktitle =	{6th Conference on Advances in Financial Technologies (AFT 2024)},
  pages =	{26:1--26:16},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-345-4},
  ISSN =	{1868-8969},
  year =	{2024},
  volume =	{316},
  editor =	{B\"{o}hme, Rainer and Kiffer, Lucianna},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2024.26},
  URN =		{urn:nbn:de:0030-drops-209620},
  doi =		{10.4230/LIPIcs.AFT.2024.26},
  annote =	{Keywords: Blockchain layer-two solutions, Wallets, Collateral management, Online algorithms, Competitive analysis}
}

Document

DOI: 10.4230/LIPIcs.ITC.2021.15

Code Offset in the Exponent

Authors: Luke Demarest, Benjamin Fuller, and Alexander Russell

Published in: LIPIcs, Volume 199, 2nd Conference on Information-Theoretic Cryptography (ITC 2021)

Abstract

Fuzzy extractors derive stable keys from noisy sources. They are a fundamental tool for key derivation from biometric sources. This work introduces a new construction, code offset in the exponent. This construction is the first reusable fuzzy extractor that simultaneously supports structured, low entropy distributions with correlated symbols and confidence information. These properties are specifically motivated by the most pertinent applications - key derivation from biometrics and physical unclonable functions - which typically demonstrate low entropy with additional statistical correlations and benefit from extractors that can leverage confidence information for efficiency. Code offset in the exponent is a group encoding of the code offset construction (Juels and Wattenberg, CCS 1999). A random codeword of a linear error-correcting code is used as a one-time pad for a sampled value from the noisy source. Rather than encoding this directly, code offset in the exponent encodes by exponentiation of a generator in a cryptographically strong group. We introduce and characterize a condition on noisy sources that directly translates to security of our construction in the generic group model. Our condition requires the inner product between the source distribution and all vectors in the null space of the code to be unpredictable.

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Luke Demarest, Benjamin Fuller, and Alexander Russell. Code Offset in the Exponent. In 2nd Conference on Information-Theoretic Cryptography (ITC 2021). Leibniz International Proceedings in Informatics (LIPIcs), Volume 199, pp. 15:1-15:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2021)

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@InProceedings{demarest_et_al:LIPIcs.ITC.2021.15,
  author =	{Demarest, Luke and Fuller, Benjamin and Russell, Alexander},
  title =	{{Code Offset in the Exponent}},
  booktitle =	{2nd Conference on Information-Theoretic Cryptography (ITC 2021)},
  pages =	{15:1--15:23},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-197-9},
  ISSN =	{1868-8969},
  year =	{2021},
  volume =	{199},
  editor =	{Tessaro, Stefano},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.ITC.2021.15},
  URN =		{urn:nbn:de:0030-drops-143348},
  doi =		{10.4230/LIPIcs.ITC.2021.15},
  annote =	{Keywords: fuzzy extractors, code offset, learning with errors, error-correction, generic group model}
}

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Competitive Policies for Online Collateral Maintenance

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Code Offset in the Exponent

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