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

The NEST distributed Oracle Machine aims to enable more on-chain users to participate in the determination process of price conversion relationships, thereby improving the reliability of Oracle Machine data and the security of the system. To counter malicious quotes, NEST has designed a submission verification mechanism for quoting and order eating, allowing validators to trade based on quotes and obtain collateral assets while proposing new quote corrections.

However, the effectiveness of this mechanism relies on the timely appearance of market orders and new quote trades in the new blocks on the chain. With the emergence of Mining Pools, individual miners are no longer working independently, but rather forming pools to consolidate computing power to increase the probability of returns. This has led to a monopoly on transaction packaging rights, where large Mining Pools tend to prioritize packaging transactions that are beneficial to themselves or have higher fees.

When 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 advantage of this to capture arbitrage opportunities, thereby threatening the security of the entire DeFi ecosystem.

The attack process mainly includes the following steps:

1. Malicious Mining Pools hoard cryptocurrencies for arbitrage in advance through methods like flash loans.

2. Make a quote to NEST that has a huge difference from the actual market price.

3. During the verification period, other Mining Pools have two options: to package the transactions with corrected quotes or not to package them.

4. Each mining pool decides whether to adjust the quote based on its own hash power share and potential earnings.

This situation can be viewed as a complete information static game among multiple Mining Pools. Each Mining Pool's decision depends on the trade-off between the profits of immediate correction bidding (a) and the profits of arbitrage after waiting for the erroneous bidding to materialize (b), as well as its own hash rate proportion.

The rejection of packing attacks by mining pools not only threatens the NEST oracle machine but also challenges the entire decentralized concept of blockchain. Effectively addressing the issues brought by mining pools will be one of the important challenges on the path to achieving true decentralization.