Analysis of NEST Oracle Machine Facing Mining Pool Denial of Service Attack

The NEST distributed Oracle Machine aims to improve the reliability of oracle data and the security of the system by allowing more on-chain users to participate in the price determination process. To combat malicious quoting, NEST has designed a quoting-eating order verification mechanism, which allows validators to trade based on quotes and propose corrections.

However, the effective operation of this mechanism relies on the timely appearance of taker orders and new quoted transactions in new blocks. With the emergence of Mining Pools, the power to package transactions has been monopolized, and large Mining Pools tend to select transactions that are favorable to themselves or have high fees for packaging, which may result in the new NEST quotes being unable to be verified in a timely manner.

In this case, NEST may output incorrect price data, creating arbitrage opportunities for certain Mining Pools, threatening the security of the DeFi ecosystem. This article will analyze in detail the Mining Pool denial of service attack targeting the NEST Oracle Machine.

Attack Process Analysis

Assuming all members participating in mining are Mining Pools and understand each other's hash rate proportions. Before the attack, malicious Mining Pools can pre-acquire cryptocurrencies for arbitrage purposes through methods like flash loans.

At the start of the attack, the malicious Mining Pool makes a bid to NEST that differs greatly from the actual market price. During the verification period, validators will propose eat orders and correct the bid to make a profit.

At this time, all Mining Pools face two choices: to package the transaction into the next block or not to package it. This constitutes a multiple independent complete information static game, and the final outcome depends on the returns of each participant under different decision combinations.

If the Mining Pool chooses to adjust the quote, it can immediately obtain a profit of a. If it does not adjust, it can accumulate cryptocurrency for arbitrage after the quote is established, obtaining a profit b that is usually greater than a. However, the actual profit must also consider the Mining Pool's hash rate proportion, as only the Mining Pools that mine new blocks can obtain the accounting rights.

Therefore, the actual consideration of income from the Mining Pool in each verification period block is:

1. Modify Quote: Pia
2. Do not modify the quote: Pib * Pn

Where Pi is the proportion of the mining pool's computing power, and Pn is the probability that all block proposals during the verification period are not modified.

The mining pool will choose whether to adjust the quotation based on its own hash rate ratio and the proportional relationship of a and b, ultimately reaching a Nash equilibrium state.

Summary

Mining Pool may leverage the advantage of computing power to delay or hinder price corrections and arbitrage from the NEST Oracle Machine. This is not only an issue faced by NEST but also a challenge to the entire decentralized concept of blockchain. How to address the problems brought about by Mining Pools is an important topic for achieving true decentralization.