How Hidden Channels and Miner Teams Shape Transaction Transparency

Ties

Summary / Zusammenfassung

Publications

Thanks

Chapter 1: Introduction

1. Introduction

   1.1 Overview of the thesis contributions

   1.2 Overview of the thesis

Chapter 2: Context

2.1 Blongschains and intelligent contracts

2.2 Transactions prioritization standards

2.3 Transparency of prioritization and compression of transactions

2.4 Decentralized governance

2.5 Blockchain scalability with layer 2.0 solutions

Chapter 3. Standards of hierarchy of transactions

3. Transactions hierarchy standards

   3.1 Methodology

   3.2 Analyze standards membership

   3.3 Investigation of standards violations

   3.4 Fresh black transactions

   3.5 Final remarks

Chapter 4. Transparency of prioritization of transactions and compression

4. Transparency of prioritization and compression of transactions

   4.1 Methodology

   4.2 On the transparency of affirmations

   4.3 On the transparency of hierarchy

   4.4 Final remarks

Chapter 5. Decentralized governance

5. Decentralized governance

   5.1 Methodology

   5.2 Governance attacks

   5.3 Governance of the compound

   5.4 Final remarks

Chapter 6. Related work

6.1 Transactions prioritization standards

6.2 Transparency of hierarchy and compression of transactions

6.3 Decentralized governance

Chapter 7. Discussion, limitations and future work

7.1 Transaction control

7.2 Transparency of transactions

7.3 Distribution of voting power to modify intelligent contracts

Conclusion

Annexes

Annex A: Additional analysis of hierarchy standards

Annex B: additional analysis of transactions prioritization and transparency of affirmations

Annex C: Additional analysis of the distribution of voting power

Bibliography

4 Transparency of prioritization and compression of transactions

In this chapter, we discuss the implications of our results concerning the lack of transparency of affirmations and the prioritization of transactions. We also ask why our results and implications would be relevant even in the face of recent changes in blockchain protocols, for example, Ethereum Improvement Protocol (EIP) 1559 (Buterin et al., 2019a) and the upgrade of the Ethereum Paris network (AKA The Merge) (Ethereum Foundation, 2022b).

The lack of transparency in the affirmations and prioritization of transactions has not been deepened in the literature, resulting in a limited understanding of its implications. This thesis aims to fill this gap by studying the following research issues.

▶ RQ 1: To what extent do private relay networks prevail to facilitate the prioritization of transactions? Given the increase in transaction attacks such as precurs and sandwich attacks, it is reasonable to consider that transaction transactions may prefer to send their transactions to minors to avoid such attacks. This research question aims to explore the current prevalence or the general adoption of private relay networks as a means for issuers to achieve their objective of protecting their transactions. However, we also consider the potential drawbacks of the inclusion of private transactions, in particular in terms of lack of transparency in the affirmations and prioritization of transactions. Thus, we are studying this research question to assess the overall advantages and disadvantages of these private relay networks at the wider blockchain ecosystem.

▶ RQ 2: Are private transactions preferentially processed by minors? This research question aims to study if minors provide preferential treatment to private transactions. Private transactions provide guaranteed payments (or costs), while costs for publicly issued transactions are available for all minors wishing to include them. We hypothesize that minors would probably offer preferential treatment for private transactions due to their guaranteed nature of payment. To answer this research question, we have conducted an active experience to assess whether minors have preferential treatment to private transactions in the context of Ethereum blockchain.

▶ RQ 3: To what extent do transactions grouping occur? Do they include public transactions? This research question focuses on exploring the frequency and characteristics of transaction grouping practices, in particular the inclusion of public transactions, in order to exploit MEV opportunities. Arbitrators may be encouraged to create flashbots (flashbots, 2022a) which combine private and public transactions to seize the financial opportunity drawn from the execution of public transactions. It should be noted that the costs associated with private transactions remain deprived of the relays and the minor until transactions in the bundle are included in a block. Therefore, we investigate the types of public transactions included in these beams and the specific contracts they call. In addition, we also study the income earned by minors to accept these beams. This analysis is crucial to advance the transparency objectives of blockchain systems.

▶ RQ 4: Was there the collusion between minors to prioritize the inclusion of transactions? This research question aims to examine whether the minors engage in collusion to prioritize the inclusion of transactions. For example, if a transmitter sends a transaction to a particular minor, we aim to investigate if other minors share this transaction to accelerate or prioritize its commitment. If there is such a collaboration, this suggests that minors can cooperate not only to accelerate transactions, but could also censor specific transactions if they choose it. To answer this research question, active experience has been carried out in the context of Bitcoin.

These research questions are essential to study the impact of the absence of compression and prioritization of transactions in Bitcoin and Ethereum blockchains. They allow us to explore the prevalence and extent of private relay networks or acceleration services currently used in these blockchains. In addition, by examining if minors end to prioritize transactions, we have an overview of potential confidence problems within blockchains. For example, this collusion can undermine confidence in the blockchain system, as minors can also censor transactions if they choose it. Then we discuss our methodology, our results and implications.

Relevant publication

The results presented in this chapter were published in (Messias et al., 2023a).