Related papers: Incentive Attacks in BTC: Short-Term Revenue Chang…
Most current assessments use ex post proxies that miss uncertainty and fail to consistently capture the rapid change in bitcoin mining. We introduce a unified, ex ante statistical model that derives expected return, downside risk, and…
We compute the revenue ratio of the Trail Stubborn mining strategy in the Bitcoin network and compare its profitability to other block-withholding strategies. We use for this martingale techniques and a classical analysis of the hiker…
We present three very simple variants of the classic Heads or Tails game using chips, each of which contributes to our understanding of the Bitcoin protocol. The first variant addresses the issue of temporary Bitcoin forks, which occur when…
This paper investigates stochastic multi-armed bandit algorithms that are robust to adversarial attacks, where an attacker can first observe the learner's action and {then} alter their reward observation. We study two cases of this model,…
We propose a mean field game model to study the question of how centralization of reward and computational power occur in Bitcoin-like cryptocurrencies. Miners compete against each other for mining rewards by increasing their computational…
Reward hacking--where agents exploit flaws in imperfect reward functions rather than performing tasks as intended--poses risks for AI alignment. Reward hacking has been observed in real training runs, with coding agents learning to…
We calculate the probability of success of block-hiding mining strategies in Bitcoin-like networks. These strategies involve building a secret branch of the block-tree and publishing it opportunistically, aiming to replace the top of the…
Reinforcement Learning (RL) algorithms have led to recent successes in solving complex games, such as Atari or Starcraft, and to a huge impact in real-world applications, such as cybersecurity or autonomous driving. In the side of the…
Cryptocurrencies employ auction-esque transaction fee mechanisms (TFMs) to allocate transactions to blocks, and to determine how much fees miners can collect from transactions. Several impossibility results show that TFMs that satisfy a…
Hashed Timelock Contract (HTLC) in Lightning Network is susceptible to a griefing attack. An attacker can block several channels and stall payments by mounting this attack. A state-of-the-art countermeasure, Hashed Timelock Contract with…
Miners in a blockchain system are suffering from ever-increasing storage costs, which in general have not been properly compensated by the users' transaction fees. This reduces the incentives for the miners' participation and may jeopardize…
Strategic mining attacks, such as selfish mining, exploit blockchain consensus protocols by deviating from honest behavior to maximize rewards. Markov Decision Process (MDP) analysis faces scalability challenges in modern digital economics,…
Forks in the Bitcoin network result from the natural competition in the blockchain's Proof-of-Work consensus protocol. Their frequency is a critical indicator for the efficiency of a distributed ledger as they can contribute to resource…
Pool block withholding attack is performed among mining pools in digital cryptocurrencies, such as Bitcoin. Instead of mining honestly, pools can be incentivized to infiltrate their own miners into other pools. These infiltrators report…
Motivated by economic applications such as recommender systems, we study the behavior of stochastic bandits algorithms under \emph{strategic behavior} conducted by rational actors, i.e., the arms. Each arm is a \emph{self-interested}…
Does the proof-of-work protocol serve its intended purpose of supporting decentralized cryptocurrency mining? To address this question, we develop a game-theoretical model where miners first invest in hardware to improve the efficiency of…
For a mining strategy we define the notion of "profit lag" as the minimum time it takes to be profitable after that moment. We compute closed forms for the profit lag and the revenue ratio for the strategies "selfish mining" and…
Bitcoin operates as a macroeconomic paradox: it combines a strictly predetermined, inelastic monetary issuance schedule with a stochastic, highly elastic demand for scarce block space. This paper empirically validates the Endogenous…
This study introduces a novel approach to walk-forward optimization by parameterizing the lengths of training and testing windows. We demonstrate that the performance of a trading strategy using the Exponential Moving Average (EMA)…
Adversarial attacks on stochastic bandits have traditionally relied on some unrealistic assumptions, such as per-round reward manipulation and unbounded perturbations, limiting their relevance to real-world systems. We propose a more…