Off-Chain Collusion and Sequential Auction Protocols: Designing Robust Mechanisms for Blockchain Markets

Ganesh et al. (2024) and Roughgarden (2024) highlight the persistent challenge of off-chain influence—miners or users colluding outside the blockchain protocol to maximize their own payoffs, undermining auction integrity. Current impossibility results show that existing designs can't simultaneously satisfy all desirable properties. But most work assumes a static setting, while in reality, miners and users may participate in a sequence of auctions, learning and adapting strategies over time. This research would model these sequential interactions, using tools from repeated games and dynamic mechanism design (see Laohakunakorn, 2019), to propose adaptive protocols that detect and deter evolving off-chain collusion tactics. For example, mechanisms might randomize reserve prices (Anunrojwong et al., 2022), rotate auction formats, or use cryptographic audits. The novelty lies in leveraging the temporal structure of blockchain markets to reinforce on-chain compliance and minimize off-chain manipulation—a crucial step beyond the static impossibility results.

References:

1. Revisiting the Primitives of Transaction Fee Mechanism Design. Aadityan Ganesh, Clayton Thomas, S. M. Weinberg (2024). ACM Conference on Economics and Computation.
2. On the Robustness of Second-Price Auctions in Prior-Independent Mechanism Design. Jerry Anunrojwong, S. Balseiro, Omar Besbes (2022). ACM Conference on Economics and Computation.
3. Essays on auctions, mechanism design, and repeated games. Krittanai Laohakunakorn (2019).
4. Transaction Fee Mechanism Design. Tim Roughgarden (2024). Journal of the ACM.