A Solomonic Solution to Ownership Disputes: An Application to Blockchain Front-Running

TL;DR

This paper introduces a mechanism inspired by Solomon's dilemma to resolve ownership disputes and prevent blockchain front-running by using threats to enforce truthful reporting based on ordinal preferences.

Contribution

It proposes a novel simultaneous report mechanism that addresses ownership disputes and blockchain front-running without requiring monetary transfers, relying solely on ordinal preferences.

Findings

The mechanism effectively resolves ownership disputes.

It eliminates blockchain front-running.

It operates using only ordinal preference information.

Abstract

Blockchain front-running involves multiple agents, other than the legitimate agent, claiming a payment from performing a contract. It arises because of the public nature of blockchain transactions and potential network congestion. This paper notes that disputes over payments are similar to classic ownership disputes (such as King Solomon's dilemma). We propose a simultaneous report mechanism that resolves Solomon's dilemma (using only ordinal preference information) and also eliminates blockchain front-running. In each case, the mechanism relies on threats to remove ownership from all claimants and preferences from the legitimate claimant over allocations to other agents.