Zeta Avarikioti

Zeta Avarikioti, Georg Fuchsbauer, Pim Keer et al.

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 the application, network, and consensus layers. 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 Hashed Timelock Contracts (HTLCs), Layer-2 protocols, and Maximal Extractable Value (MEV) showing how compositional analysis reveals new subtle incentive vulnerabilities and supports modular security proofs. Also, by introduction of a novel rational miner model, we derive new conditions for the robustness of timelocks to bribing attacks.

Zeta Avarikioti, Eleftherios Kokoris Kogias, Ray Neiheiser et al.

The security of many Proof-of-Stake (PoS) payment systems relies on quorum-based State Machine Replication (SMR) protocols. While classical analyses assume purely Byzantine faults, real-world systems must tolerate both arbitrary failures and strategic, profit-driven validators. We therefore study quorum-based SMR under a hybrid model with honest, Byzantine, and rational participants. We first establish the fundamental limitations of traditional consensus mechanisms, proving two impossibility results: (1) in partially synchronous networks, no quorum-based protocol can achieve SMR when rational and Byzantine validators collectively exceed $1/3$ of the participants; and (2) even under synchronous network assumptions, SMR remains unattainable if this coalition comprises more than $2/3$ of the validator set. Assuming a synchrony bound $Δ$, we show how to extend any quorum-based SMR protocol to tolerate up to $1/3$ Byzantine and $1/3$ rational validators by modifying only its finalization rule. Our approach enforces a necessary bound on the total transaction volume finalized within any time window $Δ$ and introduces the \emph{strongest chain rule}, which enables efficient finalization of transactions when a supermajority of honest participants provably supports execution. Empirical analysis of Ethereum and Cosmos demonstrates validator participation exceeding the required $5/6$ threshold in over $99%$ of blocks, supporting the practicality of our design. Finally, we present a recovery mechanism that restores safety and liveness after consistency violations, even with up to $5/9$ Byzantine stake and $1/9$ rational stake, guaranteeing full reimbursement of provable client losses.

Dominik Apel, Zeta Avarikioti, Matteo Maffei et al.

Rollup protocols have recently received significant attention as a promising class of Layer 2 (L2) scalability solutions. By utilizing the Layer 1 (L1) blockchain solely as a bulletin board for a summary of the executed transactions and state changes, rollups enable secure off-chain execution while avoiding the complexity of other L2 mechanisms. However, to ensure data availability, current rollup protocols require the plaintext of executed transactions to be published on-chain, resulting in inherent privacy limitations. In this paper, we address this problem by introducing Calyx, the first privacy-preserving multi-token optimistic-Rollup protocol. Calyx guarantees full payment privacy for all L2 transactions, revealing no information about the sender, recipient, transferred amount, or token type. The protocol further supports atomic execution of multiple multi-token transactions and introduces a transaction fee scheme to enable broader application scenarios while ensuring the sustainable operation of the protocol. To enforce correctness, Calyx adopts an efficient one-step fraud-proof mechanism. We analyze the security and privacy guarantees of the protocol and provide an implementation and evaluation. Our results show that executing a single transaction costs approximately $0.06 (0.00002 ETH) and incurs only constant-size on-chain cost in asymptotic terms.

Zeta Avarikioti, Krzysztof Pietrzak, Iosif Salem et al.

Payment channels effectively move the transaction load off-chain thereby successfully addressing the inherent scalability problem most cryptocurrencies face. A major drawback of payment channels is the need to ``top up'' funds on-chain when a channel is depleted. Rebalancing was proposed to alleviate this issue, where parties with depleting channels move their funds along a cycle to replenish their channels off-chain. Protocols for rebalancing so far either introduce local solutions or compromise privacy. In this work, we present an opt-in rebalancing protocol that is both private and globally optimal, meaning our protocol maximizes the total amount of rebalanced funds. We study rebalancing from the framework of linear programming. To obtain full privacy guarantees, we leverage multi-party computation in solving the linear program, which is executed by selected participants to maintain efficiency. Finally, we efficiently decompose the rebalancing solution into incentive-compatible cycles which conserve user balances when executed atomically. Keywords: Payment Channel Networks, Privacy and Rebalancing.