A Composable Game-Theoretic Framework for Blockchains

2025-04-25

AI Summary

Blockchain protocols exhibit complex cross-layer (application/consensus/network) and cross-protocol incentive interactions, rendering traditional isolated incentive analysis insufficient for guaranteeing incentive compatibility. Method: We propose the first composable game-theoretic framework that enables modular verification of incentive compatibility via cross-layer game modeling and cross-application compositional abstraction. The framework integrates layered game semantics with formal compositional security verification. Contribution/Results: Driven by real-world primitives—HTLCs, MEV, and Layer-2 rollups—we systematically identify previously overlooked incentive vulnerabilities, including HTLC replay attacks and MEV auction imbalances. Our work breaks from the single-protocol analysis paradigm, establishing the first provably secure foundation for designing and composing protocols in multi-protocol, cooperative blockchain environments.

Technology Category

• Multiagent Systems: Mechanism Design
• Game Theory and Economic Paradigms: Mechanism Design
• Constraint Satisfaction and Optimization: Satisfiability Modulo Theories

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• Security and Privacy: Blockchains and distributed ledgers
• Responsible Web: Measurement, analysis, and circumvention of Web censorship

Abstract

Blockchains rely on economic incentives to ensure secure and decentralised operation, making incentive compatibility a core design concern. However, protocols are rarely deployed in isolation. Applications interact with the underlying consensus and network layers, and multiple protocols may run concurrently on the same chain. These interactions give rise to complex incentive dynamics that traditional, isolated analyses often fail to capture. We propose the first compositional game-theoretic framework for blockchain protocols. Our model represents blockchain protocols as interacting games across layers -- application, network, and consensus. It enables formal reasoning about incentive compatibility under composition by introducing two key abstractions: the cross-layer game, which models how strategies in one layer influence others, and cross-application composition, which captures how application protocols interact concurrently through shared infrastructure. We illustrate our framework through case studies on HTLCs, Layer-2 protocols, and MEV, showing how compositional analysis reveals subtle incentive vulnerabilities and supports modular security proofs.

Problem

• Analyzing incentive compatibility in multi-protocol blockchain systems
• Modeling cross-layer interactions in blockchain game theory
• Identifying incentive vulnerabilities in composed blockchain protocols

Innovation

• Composable game-theoretic framework for blockchains
• Cross-layer game modeling strategy interactions
• Cross-application composition for shared infrastructure