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Strategic Peer Selection Using Transaction Value and Latency

Published: 07 November 2022 Publication History

Abstract

Many blockchains utilize public peer-to-peer networks to communicate transactions. As activity on blockchain-based DeFi protocols has increased, there has been a sharp rise in strategic behaviour from bots and miners, commonly captured by the notion of Maximal Extractable Value (MEV). While many works have focused on MEV arising from the smart contract layer or consensus layer, in this work we study how a strategic agent can maximise realisable MEV through the optimal choice of network peers. Specifically, we study how existing definitions and algorithms for latency optimization can be augmented with information about the transactions themselves in order to optimize peering algorithms. We formally model this optimization objective for two classes of consensus protocols : 1) time-based ("fair ordering") protocols and 2) single leader-based protocols. We present an efficient local algorithm for choosing peers strategically, and evaluate our algorithm on real world data to show that it outperforms benchmark algorithms that either choose peers randomly or do not exploit information about blockchain transactions.

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Cited By

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  • (2024)Real-Time Discovery and Mining System of Blockchain Extractable Value for Decentralized Finance Protocol OptimizationIEEE Transactions on Computational Social Systems10.1109/TCSS.2024.338671611:4(5536-5553)Online publication date: Aug-2024
  • (2024)Efficient Information Dissemination in Blockchain-Enabled Federated Learning for IoVIEEE Internet of Things Journal10.1109/JIOT.2023.334629611:9(15310-15319)Online publication date: 1-May-2024
  • (2023)Cobalt: Optimizing Mining Rewards in Proof-of-Work Network Games2023 IEEE International Conference on Blockchain and Cryptocurrency (ICBC)10.1109/ICBC56567.2023.10174933(1-9)Online publication date: 1-May-2023

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cover image ACM Conferences
DeFi'22: Proceedings of the 2022 ACM CCS Workshop on Decentralized Finance and Security
November 2022
80 pages
ISBN:9781450398824
DOI:10.1145/3560832
Permission to make digital or hard copies of all or part of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for components of this work owned by others than the author(s) must be honored. Abstracting with credit is permitted. To copy otherwise, or republish, to post on servers or to redistribute to lists, requires prior specific permission and/or a fee. Request permissions from [email protected].

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Published: 07 November 2022

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Author Tags

  1. blockchains
  2. latency
  3. mev
  4. p2p networks
  5. strategic behaviour

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View all
  • (2024)Real-Time Discovery and Mining System of Blockchain Extractable Value for Decentralized Finance Protocol OptimizationIEEE Transactions on Computational Social Systems10.1109/TCSS.2024.338671611:4(5536-5553)Online publication date: Aug-2024
  • (2024)Efficient Information Dissemination in Blockchain-Enabled Federated Learning for IoVIEEE Internet of Things Journal10.1109/JIOT.2023.334629611:9(15310-15319)Online publication date: 1-May-2024
  • (2023)Cobalt: Optimizing Mining Rewards in Proof-of-Work Network Games2023 IEEE International Conference on Blockchain and Cryptocurrency (ICBC)10.1109/ICBC56567.2023.10174933(1-9)Online publication date: 1-May-2023

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