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Decentralized exchanges (DEXes) provide effective price discovery and fair trading while dealing with the drawbacks of centralized exchanges, e.g., lack of transaction transparency and exclusive control of user assets and transaction fees. However, many DEXes suffer from frontrunning and transaction reordering, which fundamentally flaw their design. In this paper, we present a novel incentive mechanism design for mitigating frontrunning and transaction reordering even if frontrunners pay high transaction fees in DEXes. We utilize a weighted counting sort algorithm to order transactions based on the users' multi-dimensional private information (e.g., transaction delay and confidentiality). To elicit users' private information, we consider a multi-dimensional contract-theoretic design based on the users' willingness to share their private information. We show that the miner can always maximize its utility under the complete and incomplete information scenarios. We implement solutions to our multi-dimensional contract and sorting algorithm on a decentralized oracle network to create a decentralized system and design a web application to extensively evaluate the performance of our proposed incentive mechanism. We further show that ordering transactions based on users' private information increases the miner's utility by 78.42% − 84.57% and reduces the users' cost by 64.47% compared with the state-of-the-art fair sequencing services, automated arbitrage market maker, and miner extractable value auctions.INDEX TERMS Blockchain, decentralized exchanges, incentive mechanism, multi-dimensional contract, transaction ordering.

This paper explores the role of blockchains in the development of Web 3.0 and the Metaverse. The success of these technologies is dependent on the utilization of decentralized systems like blockchains, which can store and validate data on identities and reputations and facilitate the exchange of virtual assets. Full nodes, which store the entire blockchain state and validate all transactions, are essential for the decentralization and reliability of the network. However, operating a full node is resource-intensive and can be expensive. To tackle this challenge, we propose an incentive mechanism that utilizes contract-theoretic methods to economically motivate users to support the sustainability and growth of the blockchain network. Our contract design addresses the problem of information asymmetry (e.g., users' revenue-generating capabilities and efforts) between users and the blockchain network. Additionally, we recommend providing diverse incentives based on the user's revenue-generating capabilities and efforts to assist the blockchain network in funding incentives. Our experimental results demonstrate that our proposed mechanism increases the blockchain network's utility by 48.48%−54.52% and reduces the users' cost by 38.46%−62.5% compared with the state-of-the-art implementations such as Celo, Vipnode, and Pocket Network.

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