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Truthful Decentralized Blockchain Oracles

Author

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  • Yuxi Cai
  • Nafis Irtija
  • Eirini Eleni Tsiropoulou
  • Andreas Veneris

Abstract

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.

Suggested Citation

  • Yuxi Cai & Nafis Irtija & Eirini Eleni Tsiropoulou & Andreas Veneris, 2022. "Truthful Decentralized Blockchain Oracles," International Journal of Network Management, John Wiley & Sons, vol. 32(2), March.
    • Handle: RePEc:wly:intnem:v:32:y:2022:i:2:n:e2179
    DOI: 10.1002/nem.2179
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    References listed on IDEAS

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    1. Reinhard Selten, 1998. "Axiomatic Characterization of the Quadratic Scoring Rule," Experimental Economics, Springer;Economic Science Association, vol. 1(1), pages 43-61, June.
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    Cited by:

    1. Chung, Kenneth Hsien Yung & Li, Dan & Adriaens, Peter, 2023. "Technology-enabled financing of sustainable infrastructure: A case for blockchains and decentralized oracle networks," Technological Forecasting and Social Change, Elsevier, vol. 187(C).

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