Merge branch 'master' of https://github.com/w3f/research

docs/crypto.rst

@@ -10,5 +10,4 @@ research. Here are our current projects:
    :maxdepth: 1
 
    crypto/multisig
-   Light client
 

docs/polkadot/XCMP/index.md

@@ -53,7 +53,7 @@ This restriction is enforced by allowing XCMP only between pairs of parachain wh
 
 ## Authentication for consistent history
 
-A fork of the Polkadot relay chain defines a possible history of Polkadot. For parachains that refer to a particular relay chain history, we want to act on those messages and only those that were sent in this history. This means that we must use the relay chain to authenticate messages. To make this efficient and scalable we make it as light in computation and data storage as possible for the relay chain. To authenticate messages, a collator can include messages in a PoW block as follows:
+A fork of the Polkadot relay chain defines a possible history of Polkadot. For parachains that refer to a particular relay chain history, we want to act on those messages and only those that were sent in this history. This means that we must use the relay chain to authenticate messages. To make this efficient and scalable we make it as light in computation and data storage as possible for the relay chain. To authenticate messages, a collator can include messages in a PoV block as follows:
 
 1. A collator should find out from the relay chain what the latest messages for their parachain are, and then try to obtain those messages from the sending parachain. They can get these from validators who validated the sending parablock, full nodes of the sending chain or nodes of the receiving chain that already have them.
 

docs/polkadot/economics.rst

@@ -10,6 +10,10 @@ Economics
    economics/*
 
 
-This chapter covers the different economic aspects considered in the Polkadot protocol. It explains the fundamental mechanisms of the native token DOT, providing information on inflation, NPoS payments, and calculation of transaction fees. A substantial part of Polkadot’s value proposition is the ability to provide shared security for decentralized applications which can enter the ecosystem by docking onto the Relay Chain. Those Parachains are application-specific data structures that are globally coherent and validatable by the validators of the Relay Chain. The right to participate as a Parachain can be obtained by winning a Blockchain-specific candle auction format, for which we provide a game-theoretical analysis.
+This chapter covers the economic research done at the Web3 Foundation. 
 
-In addition, this chapter holds sections insights from behavioral economic projects.
+We use tools from microeconomics, behavioral economics, and game theory to analyze different aspects of the protocol.
+
+.. This chapter covers the different economic aspects considered in the Polkadot protocol. It explains the fundamental mechanisms of the native token DOT, providing information on inflation, NPoS payments, and calculation of transaction fees. A substantial part of Polkadot’s value proposition is the ability to provide shared security for decentralized applications which can enter the ecosystem by docking onto the Relay Chain. Those Parachains are application-specific data structures that are globally coherent and validatable by the validators of the Relay Chain. The right to participate as a Parachain can be obtained by winning a Blockchain-specific candle auction format, for which we provide a game-theoretical analysis.
+
+.. In addition, this chapter holds sections insights from behavioral economic projects.

docs/polkadot/economics/2-parachain-theory.md

@@ -0,0 +1,17 @@
+====================================================================
+
+**Authors**: Samuel Häfner and Alistair Stewart
+
+**Last updated**: April 17, 2021
+
+====================================================================
+
+# Theoretical Analysis of Parachain Auctions
+
+As explained [here](/polkadot/overview/3-parachain-allocation.md) and [here](https://wiki.polkadot.network/docs/en/learn-auction) Polkadot uses a candle auction format to allocate parachain slots. A candle auction is a dynamic auction with the distinguishing feature that the ending time is random. In this project, we analyze the effects of such a random-closing rule on equilibrium play when some bidders have front-running opportunities.
+
+Front-running opportunities emerge on blockchains because upcoming transaction become known among the network participants before they are included in new blocks. For blockchain implementations of auctions, this means that some bidders can see and potentially react to other bidders' bids before they come into effect; i.e., are recorded on the chain and are thus taken into account by the auction mechanism. In first-price auctions, this gives tech-savvy bidders the possibility to outbid other bidders as they please. In second-price auctions, the auctioneer could raise the payment of the winning bidder at no cost by registering his own (pseudonymous) bidder.
+
+Whereas cryptographic solutions to these problems exist, they are either very computing intensive or require multiple actions by the bidders. As an alternative that works without encrypting bids, this project analyzes a dynamic first-price auction with a random ending time. Time is discrete and in every round two bidders move sequentially in a fixed order.  We show that a random-closing rule both revenue-dominates a hard-closing rule and makes participation for the bidder being front-run more attractive. In particular, under a uniform ending time distribution both the utility of the disadvantaged bidder and total revenues approach that of a second-price auction as the number of rounds grows large. Furthermore, the good is allocated efficiently.
+
+A direct link to [most recent version of the paper will be here.](/polkadot/economics/2-parachain-theory.md)

docs/polkadot/economics/behavioral-economics/2-parachain-experiment.md → docs/polkadot/economics/3-parachain-experiment.md

@@ -11,7 +11,7 @@
 # Introduction
 
 ## Goals
-The goal of this project is to gain some concept of the expected bidding behavior of participants in the upcoming [parachain candle auctions](../2-parachain-allocation.md) on Kusama/Polkadot. Currently, the planned format can be described as a multi-object first-price candle auction, which in that form has never been analyzed theoretically or empirically in the literature.
+The goal of this project is to gain some concept of the expected bidding behavior of participants in the upcoming [parachain candle auctions](/polkadot/overview/3-parachain-allocation.md) on Kusama/Polkadot. Currently, the planned format can be described as a multi-object first-price candle auction, which in that form has never been analyzed theoretically or empirically in the literature.
 
 We will conduct an experimental investigation, with a design which models the basic mechanisms of the auction. The implementation is off-chain and follows standard experimental economics procedures, but mimics the key features of the blockchain (i.e., six second blocks, (potentially) transaction costs). Insights from the experiment can be used to gain an understanding of the bidding behavior, learn how organize the UI and potentially improve the overall design before going live. Generally, the project has the following goals: