Hedging Against Sore Loser Attacks in Cross-Chain Transactions
This addresses security and reliability issues for users and developers in decentralized finance and cross-chain systems, though it is incremental as it builds on existing models.
The paper tackles the problem of sore loser attacks in cross-blockchain commerce, where parties halt participation and lock assets, by proposing new distributed protocols for hedging cross-chain transactions like swaps and auctions, reducing vulnerability to an arbitrarily low level.
A *sore loser attack* in cross-blockchain commerce rises when one party decides to halt participation partway through, leaving other parties' assets locked up for a long duration. Although vulnerability to sore loser attacks cannot be entirely eliminated, it can be reduced to an arbitrarily low level. This paper proposes new distributed protocols for hedging a range of cross-chain transactions in a synchronous communication model, such as two-party swaps, $n$-party swaps, brokered transactions, and auctions.