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Gong, T., Minaei, M., Sun, W., & Kate, A. 2022, May 2–6 Towards overcoming the undercutting problem. Unpublished paper presented at Financial Cryptography and Data Security 2022. 
Added by: Rucknium (5/5/22, 9:01 PM)   
Resource type: Conference Paper
BibTeX citation key: Gong2022
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Categories: Monero-focused
Creators: Gong, Kate, Minaei, Sun
Collection: Financial Cryptography and Data Security 2022
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Attachments   143.pdf [7/219] URLs   https://fc22.ifca. ... roceedings/143.pdf
Mining processes of Bitcoin and similar cryptocurrencies are
currently incentivized with voluntary transaction fees and fixed block
rewards which will halve gradually to zero. In the setting where optional
and arbitrary transaction fee becomes the prominent/remaining incen-
tive, Carlsten et al. [CCS 2016] find that an undercutting attack can be-
come the equilibrium strategy for miners. In undercutting, the attacker
deliberately forks an existing chain by leaving wealthy transactions un-
claimed to attract petty complaint miners to its fork. We observe that two
simplifying assumptions in [CCS 2016] of fees arriving at fixed rates and
miners collecting all accumulated fees regardless of block size limit are
often infeasible in practice and find that they are inaccurately inflating
profitability of undercutting. Studying Bitcoin and Monero blockchain
data, we find that the fees deliberately left out by an undercutter may
not be attractive to other miners (hence to the attacker itself): the de-
liberately left out transactions may not fit into a new block without
“squeezing out” some other to-be transactions, and thus claimable fees
in the next round cannot be raised arbitrarily.
This work views undercutting and shifting among chains rationally as
mining strategies of rational miners. We model profitability of undercut-
ting strategy with block size limit present, which bounds the claimable
fees in a round and gives rise to a pending (cushion) transaction set.
In the proposed model, we first identify the conditions necessary to
make undercutting profitable. We then present an easy-to-deploy defense
against undercutting by selectively assembling transactions into the new
block to invalidate the identified conditions. Indeed, under a typical set-
ting with undercutters present, applying this avoidance technique is a
Nash Equilibrium. Finally, we complement the above analytical results
with an experimental analysis using both artificial data of normally dis-
tributed fee rates and actual transactions in Bitcoin and Monero.
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