On Public Decentralized Ledger Oracles via a Paired-Question Protocol

Merlini, Marco Antonio; Veira, Neil; Berryhill, Ryan; Veneris, Andreas

doi:10.1109/bloc.2019.8751484

Cited by 21 publications

(26 citation statements)

References 5 publications

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“…This is because smart contracts on the blockchain could be susceptible to novel attack paths [34]. The stablecoin [28] and oracle [31], [32] services could also expose the smart contract to security risks.…”

Section: B Discussionmentioning

confidence: 99%

“…However, the smart contract does not naturally have sight of the fluctuating spot price published by the Market Operator of the pool market at every trading period. Hence, needs an oracle to provide external data to the smart contract [31], [32]. The oracle's role here is to simply furnish the smart contract with the spot prices of electricity traded at every period in the pool market for electricity.…”

Section: Mmentioning

confidence: 99%

“…For demonstration purposes, we assume that a decentralized oracle service such as in [30], serves as a trustworthy oracle in . While the smart contract can read and react to the data fed by the decentralized oracle service autonomously, a malicious party could manipulate this data stream to game the operation of the smart contract [31], [32]. Hence, the oracle service introduces a possible attack vector and thus exposes the smart contract to security risks.…”

Section: Availability Of Trustworthy Oracle Service Providing Cleamentioning

confidence: 99%

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Structuring Contract-for-Difference Instruments for Hedging Electricity Price Risks on a Blockchain-based Marketplace

Alao¹,

Cuffe²

2021

Preprint

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The volatile nature of day-ahead electricity markets means that participants often resort to some form of derivative hedging instrument. One such derivative instrument is a Contract-for-Difference (CfD), specifically available to renewable generators in some jurisdictions to enable them to hedge against their price risk. CfD is a bilateral arrangement between a generator selling into, and an offtaker buying out of, a centrally cleared pool market for electricity. In this arrangement, the generator subsidizes the offtaker when the spot price is high; whereas, the offtaker subsidizes the generator when the spot price is low. This establishes a synthetic bilateral electricity transaction, operating in parallel to the pool market. Embracing CfD to hedge against price risk presents new risks such as counterparty credit, margining, third-party, and legal risks. They also incur high costs and possess underlying process risks. Decentralized Finance - an overarching term representing financial services built on top of a public blockchain - seems to present particularly compelling opportunities in electricity derivatives for these reasons. Therefore, we propose a novel Decentralized Finance instrument: a blockchain-based marketplace governed by a smart contract to act as a mediator between stakeholders mutually enrolled in bilateral CfD arrangements. The employed smart contract structure autonomously and irrefutably enforces the terms of the CfD, underpinned by a novel collateralization and settlement mechanism. This novel approach mitigates the hedging-related and underlying process risks of traditional CfD instruments.

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Section: B Discussionmentioning

confidence: 99%

Section: Mmentioning

confidence: 99%

Section: Availability Of Trustworthy Oracle Service Providing Cleamentioning

confidence: 99%

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Structuring Contract-for-Difference Instruments for Hedging Electricity Price Risks on a Blockchain-based Marketplace

Alao¹,

Cuffe²

2021

Preprint

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“…An improved version of the Astraea protocol, 8 the paired‐question protocol, proposes a simplified outcome determination rule, while at the same time efficiently disincentivizing lazy voting. Specifically, the submitters are required to propose an antithetic question pair ( i.e ., two questions with potentially opposite binary True or False answers).…”

Section: Related Workmentioning

confidence: 99%

“…The voter then submits the responses and is rewarded if the responses (i) agree with the majority, and (ii) are opposite to each other. According to the analysis, 8 the penalties for disagreements with the majority should be at least twice as large as the possible rewards in order to make the expected reward of lazy voting negligible.…”

Section: Related Workmentioning

confidence: 99%

Truthful Decentralized Blockchain Oracles

et al. 2021

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Summary Blockchain systems rely on oracles to bridge external information to the decentralized applications residing in the systems. Astraea protocols are decentralized oracle designs utilizing majority‐voting mechanism to determine the oracle outcomes and/or rewards to voters. However, the voters are indifferent between voting through a single or multiple identities, as the potential rewards by the decentralized oracles grow linearly with the voters stakes. Additionally, the majority‐voting mechanism may facilitate herd behaviors among the voters, as the voters are rewarded only if they are in agreement with the majority outcomes. In this paper, a novel oracle protocol is introduced by proposing a peer prediction‐based scoring scheme along with non‐linear staking rules, aiming at extracting subjective data truthfully. Specifically, an incentive compatible scoring scheme is designed so that voters uniquely maximize their expected score by honest reporting. The voters are rewarded when their report achieves a relatively high score compared to the rest of the voters, as opposed to the existing schemes, where a reward is only given when they agree to the majority. Furthermore, a non‐linear stake scaling rule is proposed to discourage Sybil attacks. Detailed simulation results are presented to show the operation of the proposed oracle protocol and its improvement compared to indicative mechanisms proposed in the existing literature.

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