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Auction and Classification of Smart Contracts

Author

Listed:
  • Damián-Emilio Gibaja-Romero

    (Department of Mathematics, UPAEP-University, C. 17 Sur 901, Barrio de Santiago, Puebla 72410, Mexico
    These authors contributed equally to this work.)

  • Rosa-María Cantón-Croda

    (Deanship of Engineering, UPAEP-University, C. 17 Sur 901, Barrio de Santiago, Puebla 72410, Mexico
    These authors contributed equally to this work.)

Abstract

The execution of smart contracts (SCs) relies on consensus algorithms that validate the miner who executes the contract and gets a fee to cover her expenditure. In this sense, miners are strategic agents who may focus on executing those contracts with the largest fee, to the detriment of other SCs’ execution times, which also harms the blockchain’s reputation. This paper analyzes the impact of miners’ competition on SCs’ execution times in a public blockchain. First, we explain that the Proof-of-Work mechanism casts similarities with a time auction, where the one who first adds blocks is the one who executes the contract and gets the fee. At equilibrium, costs negatively affect execution times, while the opposite holds concerning fees. However, this result does not capture the competition for other contracts; hence, we apply the Naïve Bayes method to classify SCs by considering a simulated database that comprises miners’ competition for several contracts. We observe that simultaneous competition generates patterns that differ from the ones expected by the auction solution. For example, miners’ valuation does not accelerate contracts’ execution, and high-cost smart contracts do not necessarily execute at last places.

Suggested Citation

  • Damián-Emilio Gibaja-Romero & Rosa-María Cantón-Croda, 2022. "Auction and Classification of Smart Contracts," Mathematics, MDPI, vol. 10(7), pages 1-18, March.
    • Handle: RePEc:gam:jmathe:v:10:y:2022:i:7:p:1033-:d:778208
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    References listed on IDEAS

    as
    1. Paul Milgrom, 2000. "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 245-272, April.
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