Analysis of Mining Pool Refusal to Package Attacks Faced by NEST Oracle Machine

The NEST distributed Oracle Machine aims to improve the reliability of the output data from oracles and the security of the system by allowing more on-chain users to participate in the determination process of price conversion relationships. However, this design also faces some challenges, one of which is that malicious miners may provide erroneous quotes to manipulate prices.

To address this issue, NEST has designed a submission verification mechanism for quoting and eating orders. Validators can trade based on quotes, obtain the assets pledged by the quoting party, and propose new corrective quotes. This mechanism can to some extent restrict and correct malicious quotes.

However, the effective operation of this price correction mechanism relies on the timely appearance of market orders and new quotes in the new blocks on the chain. With the emergence of mining pools, the monopoly of individual mining pools on transaction packaging rights may affect this process. Large mining pools often prioritize packaging transactions that are favorable to themselves or have higher fees, rather than those that are first published on the chain.

When this situation occurs in the NEST Oracle Machine, it may lead to new quotes being unable to be timely verified within the validation period, ultimately causing NEST to output incorrect price data. Certain Mining Pools may take advantage of this to capture arbitrage opportunities, thereby threatening the security of the entire DeFi ecosystem.

The mining pool targeted at the NEST Oracle Machine to reject packing attacks can be roughly divided into the following steps:

1. Malicious mining pools hoard cryptocurrencies for arbitrage in advance through methods such as flash loans.

2. Submit a quote to NEST that differs significantly from the actual market price.

3. During the verification period, other Mining Pools face the decision of whether to package the amended quoted transactions.

4. Each Mining Pool decides whether to adjust the quote based on its own computing power share and potential earnings.

5. If enough Mining Pools choose not to package corrected transactions, erroneous quotes may be established.

6. Malicious mining pools exploit incorrect prices for arbitrage.

This attack is essentially a multi-party complete information static game. Each mining pool weighs the benefits of immediately correcting the quote against the profits of arbitraging after the erroneous quote is established, and makes a choice based on its own hash power share.

The mining pool phenomenon not only affects the NEST Oracle Machine but also poses challenges to the entire decentralized concept of blockchain. How to solve the problems brought by mining pools is a major challenge that cannot be avoided in the process of blockchain technology moving towards true decentralization. In the future, innovation is needed at both the technical and mechanism levels to maintain the fairness and security of blockchain systems.