Decentralized Common Knowledge Oracles
This addresses the challenge of reliable decentralized oracles for blockchain systems, which is incremental as it builds on existing game-theoretic approaches.
The paper tackles the problem of obtaining common knowledge truths on a blockchain in a decentralized setting by defining and analyzing three mechanisms, showing that under a reasonable economic condition, these mechanisms are individually rational, incentive compatible, and decide true outcomes for valid oracle queries in both non-cooperative and cooperative settings.
We define and analyze three mechanisms for getting common knowledge, a posteriori truths about the world onto a blockchain in a decentralized setting. We show that, when a reasonable economic condition is met, these mechanisms are individually rational, incentive compatible, and decide the true outcome of valid oracle queries in both the non-cooperative and cooperative settings. These mechanisms are based upon repeated games with two classes of players: queriers who desire to get common knowledge truths onto the blockchain and a pool of reporters who posses such common knowledge. Presented with a new oracle query, reporters have an opportunity to report the truth in return for a fee provided by the querier. During subsequent oracle queries, the querier has an opportunity to punish any reporters who did not report truthfully during previous rounds. While the set of reporters has the power to cause the oracle to lie, they are incentivized not to do so.