This Week in Blockchain Research Issue #34
|zk Capital||Nov 13, 2019|
Paper of the Week:
Algorand has garnered the most attention within the permissionless blockchain and cryptocurrency community, primarily because of its innovative PoS-based consensus or byzantine agreement protocol that is not only computationally (and energy) efficient, but also provides strong security guarantees against forking in a network comprising of faulty and malicious users or nodes.
However, one critical issue has not received much, if any, attention: Does the currently proposed Algorand reward distribution approach promote participation or cooperation, and not defection, among rational users to complete all the required protocol tasks? In other words, is the current Algorand reward distribution approach incentive-compatible?
This paper is the first attempt to formally analyze the Algorand’s reward distribution strategy by employing well-established game-theoretic tools and techniques.
Despite its promise, one relatively under-studied aspect of this protocol has been the incentive compatibility of its reward sharing approach, without which cooperation cannot be guaranteed and the protocol will fail in a practical environment comprising of rational users.
This work models the participation costs and rewards received within a strategic interaction (or game) scenario by empirically showing that even a small number of nodes defecting to participate in the protocol tasks due to insufficiency of the available incentives can result in the Algorand network failing to compute and add new blocks of transactions.
It also shows that this effect, which was observed in simulation experiments, can be formalized by means of a mathematical (game-theoretic) model of interaction in Algorand given its participation costs and the current (or planned) reward distribution/sharing approach envisioned by the Algorand Foundation.
Analyzing this game model this work observed that mutual cooperation under the currently proposed reward sharing approach is not a Nash equilibrium which is a significant result and could threaten the success of an otherwise robust distributed consensus mechanism.
Finally, a novel reward sharing approach for Algorand is proposed and formally showing that it is incentive-compatible, i.e., it can guarantee cooperation within a group of selfish Algorand users.
Summary: An efficient RingCT protocol for blockchain confidential transactions, whose security is based on “post-quantum” (module) lattice assumptions.
Affiliations: * Monash University.
Summary: Bitcoin market is the largest market of worldwide scale that is uninterruptedly open 24/7 and it is non-correlated with the one of traditional stock markets.
Affiliations: * FORTH-ICS.
Summary: A security protocol and middleware system for Gas-aware data Replication with Blockchains.
Check out paper of the week!
Summary: This paper investigates the determinants of fintech start-up emergence and fintech innovation by financial services incumbents across 21 OECD countries and 226 regions over the 2007 – 2016 period
2. Paper Title: To FinTech and Beyond.
Summary: A novel editorial protocol – a Registered Report format – including a competitive program for FinTech-related proposals that drew 156 submissions from scholars around the world.
3. Paper Title: New Tech v. New Deal: Fintech As A Systemic Phenomenon.
Summary: This Article presents an alternative account of fintech as a systemic, as opposed to merely transactional, phenomenon.
Authors: Saule T. Omarova*,
Affiliations: * Cornell University.
4. Paper Title: Cloud Crypto Land.
Summary: A simple legal argument that seeks to demonstrate the impossibility of a meaningful blockchain-based economic system. It is argued that features present in all major legal systems mean that real assets cannot be traded on blockchain-based systems, unless design choices are made which necessarily remove all advantages the technology offers over existing solutions.
Authors: Edmund-Philipp Schuster*,
Affiliations: * London School of Economics.
Nov 11-15 - ACM Conference on Computer and Communications Security(London)
Feb 10-14 - Financial Cryptography and Data Security 2020(Malaysia)
Feb 19-21 - Stanford Blockchain Conference 2020 (Palo Alto)
March 07-08 - Cryptoeconomic Systems Conference 2020 by MIT Press (Boston)
Past Conferences’ Videos:
“Significant research in the blockchain space is constantly being achieved by academic researchers. Unfortunately, a lot of this research is overlooked due to the massive numbers of papers being generated and the way they are being promoted and published. We’ve put together a categorized list of academic papers that can guide our subscribers and keep them up to date.”
Thanks for reading! If we missed anything, shoot us an email so that we can feature it in our next newsletter!
This newsletter is for informational purposes only. This content does not in any way constitute an offer or solicitation of an offer to buy or sell any investment solution or recommendation to buy or sell a security; nor it is to be taken as legal, business, investment, or tax advice. In fact, none of the information in this or other content on zk Capital should be relied on in any manner as advice. None of the authors, contributors, or anyone else connected with zk Capital, in any way whatsoever, can be responsible for your use of the information contained in this newsletter.