Zero-Collateral Lotteries in Bitcoin and Ethereum
This work addresses the accessibility and cost issues in decentralized lotteries for cryptocurrency users, representing a significant improvement over prior methods.
The authors tackled the problem of high collateral requirements in cryptocurrency lotteries by introducing protocols that eliminate the need for collateral, reducing the required rounds to O(log N) from previous O(N^2) collateral scaling, enabling participation by players with limited funds and improving efficiency.
We present cryptocurrency-based lottery protocols that do not require any collateral from the players. Previous protocols for this task required a security deposit that is $O(N^2)$ times larger than the bet amount, where $N$ is the number of players. Our protocols are based on a tournament bracket construction, and require only $O(\log N)$ rounds. Our lottery protocols thus represent a significant improvement, both because they allow players with little money to participate, and because of the time value of money. The Ethereum-based implementation of our lottery is highly efficient. The Bitcoin implementation requires an $O(2^N)$ off-chain setup phase, which demonstrates that the expressive power of the scripting language can have important implications. We also describe a minimal modification to the Bitcoin protocol that would eliminate the exponential blowup.