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

The NEST decentralized Oracle Machine aims to enable more on-chain users to participate in the determination process of price conversion relationships, thereby enhancing data reliability and system security. To address the issue of malicious quoting, NEST has designed a submission verification mechanism for quoting and order matching, allowing validators to trade based on quotes and propose corrections.

However, the effective operation of this mechanism relies on the timely appearance of market orders and new quotes in new blocks on the chain. With the emergence of Mining Pools, the monopoly on transaction packaging rights has become a potential threat. Large mining pools may selectively package transactions that are beneficial to themselves or have higher fees, rather than the transactions that were released first.

If this situation occurs in the NEST Oracle Machine, it may lead to new quotes not being validated in a timely manner during the verification period, ultimately outputting incorrect price data. Some Mining Pools may take this opportunity to capture arbitrage opportunities, threatening the security of the entire DeFi ecosystem.

The attack process mainly includes:

1. Malicious Mining Pool hoarding cryptocurrencies for arbitrage in advance.
2. Submit quotes to NEST that have a huge disparity from the actual market price
3. During the verification period, each Mining Pool faces the choice of whether to package corrected transactions.
4. The mining pool makes game theory decisions based on hash rate proportion and potential earnings.

This type of attack is essentially a multi-party participatory complete information static game. The Mining Pool weighs the immediate benefit a gained from correcting the quote against the potentially greater benefit b from not correcting. The final decision depends on the respective hash power shares and the ratio relationship between a and b.

The phenomenon of mining pools not only affects the NEST oracle machine, but also poses a challenge to the entire decentralized philosophy of blockchain. How to address the issues brought about by mining pools is an unavoidable problem on the path to achieving true decentralization. In the future, efforts need to be made on both the technical and governance levels to maintain the healthy development of the blockchain ecosystem.