Censorship-Resistant Sealed-Bid Auctions on Blockchains

2026-06-12

AI Summary

This work addresses the vulnerability of on-chain open bidding to censorship, exclusion, or frontrunning by consensus nodes, which undermines the fairness of sealed-bid auctions. To resolve this, the authors propose a censorship-resistant on-chain sealed auction protocol that integrates a timestamping oracle with a FOCIL-based censorship-resistant inclusion list. Only the winning bid is settled on-chain, while Groth16 zero-knowledge proofs (over the BN254 curve) and Poseidon hashing ensure bidder anonymity and commitment binding. This scheme is the first to simultaneously achieve four critical properties: hiding both bid values and identities, synchronized bid revelation, prevention of lossless bid withdrawal, and winner-only payment, thereby effectively mitigating known attacks. Experimental results demonstrate that auction proof generation takes only 13 ms with verification under 1 ms; eligibility proofs for Merkle trees up to size 2³² require 47–159 ms to generate and approximately 1 ms to verify, making the protocol suitable for high-value, time-sensitive applications.

Abstract

Auctions are now central to blockchain markets, settling NFT sales, token launches, DeFi liquidations, and arbitrage opportunities. Each on-chain bid is a public transaction whose inclusion is decided by a single consensus proposer per block. The proposer can observe pending bids, exclude competitors, and submit bids of their own, breaking the fairness guarantees of classical sealed-bid auctions. To enable latency-sensitive sealed-bid auctions in blockchain settings, we formalize four properties -- each necessary to prevent a concrete attack -- and design a protocol achieving all four: hiding bid contents, existence, and bidder identity until reveal (Hiding); counting all timely honest bids and rejecting late adversarial bids (Simultaneous Release); preventing silent withdrawal of committed bids (No Free Bid Withdrawal); and charging on-chain fees only to winners (Auction Participation Efficiency). Our protocol uses a timestamping oracle (instantiated with a committee of 2f_ts+1 timestampers) and a censorship-resistant inclusion predicate (instantiated using a FOCIL-based inclusion list), with only the winning bid settled on-chain. Our construction relies on two zero-knowledge proofs: an eligibility proof that anonymously proves deposit membership to the timestamping committee, and an auction proof that binds a bid to a specific auction for the inclusion list committee. We implement both using Groth16 over BN254 with Poseidon hashing in arkworks/Rust: the auction proof generates in 13 ms and verifies in under 1 ms; eligibility proofs for Merkle trees up to 2^32 bidders generate in 47-159 ms and verify in about 1 ms. Together, this yields a sealed-bid auction primitive practical for high-value, time-sensitive blockchain settings.

Problem

• sealed-bid auctions
• blockchain
• censorship resistance
• fairness
• transaction ordering

Innovation

• sealed-bid auction
• censorship resistance
• zero-knowledge proof
• timestamping oracle
• blockchain fairness