NEST Oracle Machine Faces Challenges from Mining Pool Denial of Service Attacks

The NEST distributed Oracle Machine aims to enhance data reliability and system security through extensive on-chain user participation. To counter malicious quotes, NEST has designed a quote-eating verification mechanism that allows validators to trade based on quotes and propose corrections.

However, the effective operation of this mechanism relies on the timely appearance of order matching and new quote transactions in the new blocks. With the emergence of Mining Pools, the monopoly on transaction packaging rights has become a potential issue. Large mining pools may prioritize packaging transactions that are beneficial to themselves or have higher fees, rather than the transactions that were published first.

This situation may cause the NEST Oracle Machine to fail to verify new quotes in a timely manner, ultimately outputting incorrect price data, creating arbitrage opportunities for certain Mining Pools, and threatening the security of the DeFi ecosystem.

Attack Process Analysis

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

2. The Mining Pool submits a quote to NEST that has a significant discrepancy from the actual market price.

3. During the validation period, other validators will propose arbitrage transactions to correct the quoted price.

4. At this point, all Mining Pools face the decision of whether to package the transaction, forming a multi-party complete information static game.

5. The Mining Pool decides whether to adjust the quote based on factors such as its own computing power ratio and potential收益, ultimately achieving Nash equilibrium.

This attack exploits the control that mining pools have over transaction packaging, which may lead to delays or obstructions in price corrections, thereby affecting the normal functioning of the NEST oracle machine.

Conclusion

The mining pool phenomenon not only affects the NEST oracle machine but also poses a challenge to the entire decentralized concept of blockchain. Effectively addressing the issues brought by mining pools is an important topic on the path to achieving true decentralization. This requires joint efforts from all parties in the industry to explore a more equitable and secure consensus mechanism and governance model.