The Economics of Smart Contracts

Abstract

Ethereum is a distributed blockchain that can execute smart contracts, which inter-communicate and perform transactions automatically. The execution of smart contracts is paid in the form of gas, which is a monetary unit used in the Ethereum blockchain. The Ethereum Virtual Machine (EVM) provides the metering capability for smart contract execution. Instruction costs vary depending on the instruction type and the approximate computational resources required to execute the instruction on the network. The cost of gas is adjusted using transaction fees to ensure adequate payment of the network.In this work, we highlight the "real" economics of smart contracts. We show that the actual costs of executing smart contracts are disproportionate to the computational costs and that this gap is continuously widening. We show that the gas cost-model of the underlying EVM instruction-set is wrongly modeled. Specifically, the computational cost for the SLOAD instruction increases with the length of the blockchain. Our proposed performance model estimates gas usage and execution time of a smart contract at a given block-height. The new gas-cost model incorporates the blockheight to eliminate irregularities in the Ethereum gas calculations. Our findings are based on extensive experiments over the entire history of the EVM blockchain.

Non-Fungible Token Fraud: Studying security issues and improvements for NFTmarketplaces using hashing techniques

“…Miners must then compete for the next block by solving complex mathematical challenges and are then rewarded with block rewards (based on consensus) as well as transaction fees in Ether (ETH), Ethereum currency, for executing the transactions in the block. By incentivising the miners in ensuring the validity of the transactions and the building of blocks, they are securing the network [27].…”

EVMTracer: Dynamic Analysis of the Parallelization and Redundancy Potential in the Ethereum Virtual Machine

“…The storage information can be accessed or updated at runtime by executing the SLOAD and SSTORE instructions. However, because of the size of the MPTs, the SLOAD and SSTORE instructions are prohibitively expensive in terms of performance [49].…”

“…E.g., from the final runtime dependence graph in Figure 7g we observe that the two SSTORE instructions at trace steps 5 and 7 do not have to be executed sequentially. Because SSTORE instructions generally incur a high execution-time overhead [49], executing them in parallel can substantially improve EVM performance.…”

“…EVMTracer is based on an existing efficient transaction replay system [29] that enables us to collect runtime information for millions of transactions without the substantial overhead experienced with client software [49]. We collect the runtime dependence graphs for all transactions in the initial 12 M blocks of Ethereum and use them to determine two performance characteristics of smart contracts.…”

EDSC: An Event-Driven Smart Contract Platform

“…To determine the fee for transactions and blocks, it uses attributes such as gas limit and gas price. In short, used gas multiplied by the gas price corresponds to the fee that the miner receives, where used gas depends on the computational requirements of the smart contract [33], [34], but never exceeds the gas limit.…”