Papers for
decentralized finance teams
Papers whose findings have a practical use for this group, as judged from the abstract. Open a paper to read what it means in practice.
Flashblocks auction timing reduces bidding fees and alters competition
Priority Gas Auction Cadence and Searcher Competition: Evidence from Flashblocks on Base
Abstract: Flashblocks divide a block's priority gas auction into shorter sequential auctions that commit transaction order before the block is complete. We ask how this auction cadence affects bidding and competition among automated arbitrageurs, or searchers. In July 2025 Base replaced a single 2 s auction with ten 200 ms auctions. We use this change to estimate the searcher response from on-chain data alone. On an address-day panel of 3,032 searchers and 8,053 activity-matched controls, a difference-in-differences design estimates a 0.187 gwei fall in the effective priority fee (59% of the searcher pre-period mean). The share of searcher priority-fee value paid in the first tenth of block gas falls from 0.98 to 0.28. This fee compression is the identified effect. The revert-rate response is not (causally) identified and is reported descriptively. At the level of a single opportunity, the winning fee splits into an approximately invariant floor and a competitive premium. The premium scales about linearly with auction duration at high contention and less steeply at low contention. A first-price auction model with uncertain arrival and partial payments by losing searchers accounts for this pattern. We match attempts to the pool they contest. A higher-fee transaction reverts behind a lower-fee winner that landed earlier in 1.9 to 2.7% of contested opportunities by value, an upper bound. Latency therefore decides part of the ordering. A micro-auction model projects diminishing returns from shortening the window below 200 ms, as bids approach a nonzero floor. Rollups such as Arbitrum One now make auction cadence a governance tunable parameter, so these estimates inform how it is set.
Blockchain prediction markets vulnerable to trade failures and attacks
Ghost-Filled Orders: Detecting and Testing Atomicity Violations in Non-Custodial Prediction Markets
Abstract: Blockchain based prediction markets combine offchain order management with onchain settlement. This architecture supports user controlled custody, since users keep funds in wallets or smart contracts while submitting signed orders to an offchain order book. However, it creates an atomicity gap. An order may be valid when accepted or matched offchain, but become invalid before the corresponding onchain settlement transaction is executed. This behavior, often called ghost filled orders by the community, can cause trades that appear filled offchain to fail onchain. This paper studies this atomicity gap through a case study of Polymarket. We show how the delay between offchain order acceptance and onchain settlement allows adversaries to invalidate unfavorable orders after observing market outcomes or price movements. We then quantify the scale and financial impact of this behavior over a nine-month period from August 12, 2025, to May 22, 2026, using 1.8 million reverted transactions involving Polymarket official smart contracts. Our analysis separates attacker profit from market and user loss, and develops conservative measurement rules to avoid overclaiming impact. We further develop a methodology for testing other blockchain based prediction markets and apply it to three additional markets. We find that all three are vulnerable to the same class of attack, and that one design enables direct attacker profit. We have reported the findings to all three projects; one project had acknowledged the issue at the time of the study.