Games in Public Announcement: How to Reduce System Losses in Optimistic Blockchain Mechanisms

Abstract

Announcement games, where information is disseminated by announcers and challenged by validators, are prevalent in real-world scenarios. Validators take effort to verify the validity of the announcements, gaining rewards for successfully challenging invalid ones, while receiving nothing for valid ones. Optimistic Rollup, a Layer 2 blockchain scaling solution, exemplifies such games, offering significant improvements in transaction throughput and cost efficiency. We present a game-theoretic model of announcement games to analyze the potential behaviors of announcers and validators. We identify all Nash equilibria and study the corresponding system losses for different Nash equilibria. Additionally, we analyze the impact of various system parameters on system loss under the Nash equilibrium. Finally, we provide suggestions for mechanism optimization to reduce system losses.