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

The NEST distributed Oracle Machine aims to enhance the reliability of the data output from the Oracle Machine and the security of the system by allowing more on-chain users to participate in the price conversion relationship determination process. To address the issue of malicious quoting, NEST has designed a quote-eat order submission verification mechanism that allows validators to trade based on quotes and correct prices.

However, the effective operation of this mechanism relies on the timely appearance of market order trades and new quote trades in the new blocks on the chain. With the emergence of Mining Pools, their monopoly on transaction packaging rights may threaten the normal operation of this mechanism. Large Mining Pools tend to prioritize packaging trades that are advantageous to themselves or have higher fees, rather than the trades that are first published on the chain.

If this situation occurs in the NEST Oracle Machine, it may lead to new quotes not being timely verified within the verification period, ultimately resulting in the NEST outputting incorrect price data. Certain Mining Pools may take this opportunity to capture arbitrage, threatening the overall security of the DeFi ecosystem.

The specific attack process is as follows:

1. Malicious Mining Pools hoard cryptocurrencies in advance for arbitrage.

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

3. During the verification period, other validators will propose single-sided transactions to correct the quotes.

4. All Mining Pools face the decision of whether to include this transaction in the next block.

5. The mining pool chooses whether to adjust the quote based on their respective hash rate share and potential收益, forming a Nash equilibrium.

The decision of the Mining Pool depends on the comparison of two types of returns:

• Immediately correct the profits obtained from the quote ( and are proportional to the computing power )
• No price correction, waiting for the arbitrage profit after the quote is established.

Ultimately, the Mining Pool may leverage its computational power advantage to delay or obstruct price corrections, arbitraging from the NEST Oracle Machine.

This issue not only affects the NEST Oracle Machine but also challenges the entire concept of decentralization in blockchain. How to effectively address the problems brought by Mining Pools is an unavoidable important topic in the process of achieving true decentralization.