Bachelor/Master Thesis
Fair transaction order in Hedera Hashgraph
Providing a fair transaction order is an important feature for a distributed ledger, which protects the network against front-running attacks [1]. Front-running means, for example, that entities running the protocol exploit insider information to place their own transaction in front of other, innocent transactions. Hence, they could influence the market price and benefit from such manipulations. In many of today’s blockchain networks, miners have the power to control which transactions go into a block and to determine their order within a block. Front-running attacks by miners are therefore common today. The financial advantage they can gain like this has been termed miner-extractable value (MEV).
To prevent such systematic exploitation of users by blockchain miners, a fair transaction order is required. Protocols for fairly ordering transactions already exist, but their implementation is not straightforward.
Hedera Hashgraph [2] is a public distributed ledger for building and deploying decentralized applications and microservices running on a permissioned network. This protocol already prevents certain kinds of front-running attacks. The Hedera Consensus Service (HCS) provides a trust layer for diverse application, produces timestamps, and may add fair order for transactions of different applications.
The goal of this project is to analyze and to understand the approach taken by Hedera Hashgraph [3] towards fair transaction ordering. It should be compared to other approaches (such as “pairwise voting”) from the literature. The aspects to consider are safety, robustness, fairness, efficiency, and more.
References
[1] Front-running
[2] Hedera Hashgraph
[3] Fairness in Hedera Hashgraph