Fintech Thrust Seminar | On the Security of Optimistic Blockchain Mechanisms
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Fintech Thrust Seminar | On the Security of Optimistic Blockchain Mechanisms
Abstract:
Many new blockchain applications (e.g., layer-2 scaling solutions, proof-of-stake layer-1 chains, and cross-chain bridges, etc.) adopt an “optimistic” design, that is, the system proceeds as if all participants are well-behaving, presumably sustained by some “stake-and-slash” mechanisms. We formulate the logic of such optimistic systems within a simple game and characterize all equilibria. We point out that such protocols cannot be secure if all participants are rational. Therefore, to ensure security, protocol designers have to either impose a trust assumption regarding the presence of altruistic participants or look for alternative designs (e.g., zero-knowledge proof-based designs).
Jiasun Li is an associate professor of finance at George Mason University. He received his Ph.D. in finance from UCLA Anderson School of Management and B.S. in mathematics from Fudan University. His current research interest is at the intersection of economics and computer science, including blockchain technologies and FinTech applications. His research papers analyze the incentives of participants in distributed consensus protocols, the role of crypto tokens in jumpstarting platforms, the industrial organization of cryptocurrency mining pools with implications for blockchain (de-)centralization and energy consumption, factor structures in cryptocurrency returns, manipulations on crypto exchange, crypto derivatives, cross-chain commutation, the reliability of blockchain explorers, and the security design of investment crowdfunding for both investors and entrepreneurs to harness "wisdom of the crowd". He has also studied information economics, the theory of the firm, mechanism design, governance, and market microstructure. His research has been accepted in leading business/finance journals including the Journal of Finance, Review of Financial Studies, and Management Science as well as leading computer science conferences/workshops including ACM Web (WWW) and Financial Cryptography (FC), among others. He is a winner of the Yihong Xia Best paper award at CICF and Chicago Quantitative Alliance (CQA) academic paper competition, along with many other paper prizes. He has taught blockchain technologies to both MBA and undergraduate students, served on the committees of major blockchain conferences such as Financial Crypto, ACM Advances in Financial Technologies, CCS DeFi, and IEEE Crypto Valley, and partnered with the U.S. government and private sectors on blockchain economics research. His students in the Master of Management program have voted him "Faculty of the Year" (one recipient per year from the entire faculty).