Paper 2024/1643

Optimizing Liveness for Blockchain-Based Sealed-Bid Auctions in Rational Settings

Abstract

Blockchain-based auction markets offer stronger fairness and transparency compared to their centralized counterparts. Deposits and sealed bid formats are usually applied to enhance security and privacy. However, to our best knowledge, the formal treatment of deposit-enabled sealed-bid auctions remains lacking in the cryptographic literature. To address this gap, we first propose a decentralized anonymous deposited-bidding (DADB) scheme, providing formal syntax and security definitions. Unlike existing approaches that rely on smart contracts, our construction utilizes a mainchain-sidechain structure that is also compatible with the extended UTXO model. This design further allows us to develop a consensus mechanism on the sidechain dedicated to securely recording bids for allocation. Specifically, we build atop an Algorand-style protocol and integrate a novel block qualification mechanism into the block selection. Consequently, we prove, from a game-theoretical perspective, that our design optimizes liveness latency for rational users who want to join the auction, even without explicit incentives (e.g., fees) for including bids. Finally, our implementation results demonstrate the potential performance degradation without the block qualification mechanism.