Abstract
In permissionless blockchains, transaction issuers include a fee to incentivize miners to include their transactions. To accurately estimate this prioritization fee for a transaction, transaction issuers (or blockchain participants, [email protected] generally) rely on two fundamental notions of transparency, namely contention and prioritization transparency. Contention transparency implies that participants are aware of every pending transaction that will contend with a given transaction for inclusion. Prioritization transparency states that the participants are aware of the transaction or prioritization fees paid by every such contending transaction. Neither of these notions of transparency holds well today. Private relay networks, for instance, allow users to send transactions privately to miners. Besides, users can offer fees to miners via either direct transfers to miners’ wallets or off-chain payments—neither of which are public. In this work, we characterize the lack of contention and prioritization transparency in Bitcoin and Ethereum resulting from such practices. We show that private relay networks are widely used and private transactions are quite prevalent. We show that the lack of transparency facilitates miners to collude and overcharge users who may use these private relay networks despite them offering little to no guarantees on transaction prioritization. The lack of these transparencies in blockchains has crucial implications for transaction issuers as well as the stability of blockchains. Finally, we make our data sets and scripts publicly available.
Original language | English |
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Title of host publication | Financial Cryptography and Data Security |
Subtitle of host publication | 27th International Conference, FC 2023, Bol, Brač, Croatia, May 1–5, 2023, Revised Selected Papers, Part II |
Editors | Foteini Baldimtsi, Christian Cachin |
Publisher | Springer Science and Business Media Deutschland GmbH |
Pages | 221-240 |
Number of pages | 20 |
Volume | 2 |
ISBN (Electronic) | 9783031477515 |
ISBN (Print) | 9783031477508 |
DOIs | |
Publication status | Published - 2024 |
Event | 27th International Conference on Financial Cryptography and Data Security, FC 2023 - Bol, Croatia Duration: 1 May 2023 → 5 May 2023 |
Publication series
Name | Lecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics) |
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Volume | 13951 |
ISSN (Print) | 0302-9743 |
ISSN (Electronic) | 1611-3349 |
Conference
Conference | 27th International Conference on Financial Cryptography and Data Security, FC 2023 |
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Country/Territory | Croatia |
City | Bol |
Period | 1/05/23 → 5/05/23 |
Bibliographical note
Publisher Copyright:© 2024, The Author(s).
Funding
Acknowledgments. This research was supported in part by a European Research Council (ERC) Advanced Grant “Foundations for Fair Social Computing”, funded under the European Union’s Horizon 2020 Framework Programme (grant agreement no. 789373). It was also supported by MIAI @ Grenoble Alpes (ANR-19-P3IA-0003) and by the French National Research Agency under grant ANR-20-CE23-0007.
Funders | Funder number |
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European Research Council | |
Horizon 2020 Framework Programme | 789373 |
Horizon 2020 Framework Programme | |
Agence Nationale de la Recherche | ANR-20-CE23-0007 |
Agence Nationale de la Recherche | |
MIAI @ Grenoble Alpes | ANR-19-P3IA-0003 |
Keywords
- Bitcoin
- Contention transparency
- Ethereum
- MEV
- Prioritization transparency
- Private transactions