Paper 2021/166

Cost Fairness for Blockchain-Based Two-Party Exchange Protocols

Matthias Lohr, Benjamin Schlosser, Jan Jürjens, and Steffen Staab

Abstract

Blockchains can guarantee fairness during the exchange of digital goods such that in a two-party exchange no one is defrauded by a malicious opponent. While several notions of fairness have been discussed in the literature, they all ignore that damage cannot only be incurred by the malicious failure of the exchange, but also by an unfair allocation of transaction costs. To address this issue we: 1. define the novel concept of cost fairness, which 2. builds on the notion of maximum cost matrices that formalize transaction costs in different combinations of benevolent and malicious behavior. 3. We show how limited notions of cost fairness can be achieved by modifying an existing exchange protocol or using a container protocol. In particular, we also provide 4. a tool that let us predict the maximum cost matrix for a specific protocol execution and, thus, gives trade exchange parties the possibility to weigh not only the value of transaction of exchanged goods but also the associated transaction costs.