Author: Chris Stewart 2023-05-09 15:09:16
Published on: 2023-05-09T15:09:16+00:00
The email thread discusses the concept of front-running in peer-to-peer marketplaces. Front-running involves entering into a trade with advance knowledge of a block transaction that will influence the price of the underlying security to capitalize on the trade. The concern is that bulletin board operators may front-run trades, but there are security paradigms to mitigate this risk. One paradigm involves duplicating the announcement of offers to multiple concurrent boards and monitoring the latency for anomalies. Another paradigm involves running the bulletin boards as a federation under Honey Badger BFT, where incoming board offers become consensus items that must be announced to all federation members before adoption. The Civkit proposes a flexible framework for peer-to-peer marketplaces, where propagation latency monitoring and federation set and rules can be tweaked as "front-running resistance" parameters, adapting to the types of trades and market participants' tolerance. The design aims to serve on-ramp/off-ramp trading while being extendable to support any kind of trading, including goods, services, and bitcoin financial derivatives. The whitepaper goes deep into the system's architecture, which combines the Nostr architecture of simple relays announcing trade orders with Lightning onion routing infrastructure. The market boards are Nostr relays with a Lightning gateway, each operating autonomously and in competition. The trades are escrowed under Bitcoin Script contracts, relying on moderations and know your peer oracles for adjudication. A consistent incentive framework for service operators is proposed through privacy-preserving credentials backed by Bitcoin payments, incentivizing efficiency akin to routing hops on Lightning and miners on the base layer.
Updated on: 2023-06-16T17:24:36.016443+00:00