A Composable Game-Theoretic Framework for Blockchains
This addresses the challenge of ensuring secure and decentralized blockchain operation for developers and users by providing a formal framework to analyze incentive dynamics, though it is incremental in extending existing game-theoretic methods to composition.
The paper tackles the problem of analyzing incentive compatibility in blockchains under complex interactions across layers and applications, proposing a compositional game-theoretic framework that reveals new vulnerabilities and supports modular security proofs, as demonstrated in case studies on HTLCs, Layer-2 protocols, and MEV.
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.