Censorship Resistance in On-Chain Auctions

TL;DR

This paper introduces a new measure of censorship resistance in blockchains, focusing on the cost for an adversary to censor transactions within a fixed time, and applies it to improve auction integrity in multi-proposer blockchains.

Contribution

It defines censorship resistance as a cost-based metric considering transaction tips and demonstrates how multi-proposer blockchains can enhance censorship resistance for financial applications like auctions.

Findings

Higher tips increase transaction censorship cost.

Multi-proposer blockchains improve censorship resistance.

Auction integrity benefits from multiple proposers.

Abstract

Modern blockchains guarantee that submitted transactions will be included eventually; a property formally known as liveness. But financial activity requires transactions to be included in a timely manner. Unfortunately, classical liveness is not strong enough to guarantee this, particularly in the presence of a motivated adversary who benefits from censoring transactions. We define censorship resistance as the amount it would cost the adversary to censor a transaction for a fixed interval of time as a function of the associated tip. This definition has two advantages, first it captures the fact that transactions with a higher miner tip can be more costly to censor, and therefore are more likely to swiftly make their way onto the chain. Second, it applies to a finite time window, so it can be used to assess whether a blockchain is capable of hosting financial activity that relies on timely inclusion. We apply this definition in the context of auctions. Auctions are a building block for many financial applications, and censoring competing bids offers an easy-to-model motivation for our adversary. Traditional proof-of-stake blockchains have poor enough censorship resistance that it is difficult to retain the integrity of an auction when bids can only be submitted in a single block. As the number of bidders $n$ in a single block auction increases, the probability that the winner is not the adversary, and the economic efficiency of the auction, both decrease faster than $1/n$. Running the auction over multiple blocks, each with a different proposer, alleviates the problem only if the number of blocks grows faster than the number of bidders. We argue that blockchains with more than one concurrent proposer have can have strong censorship resistance. We achieve this by setting up a prisoner's dilemma among the proposers using conditional tips.