Fairness

Fairness is guaranteed by immutable smart contracts and consensus protocols that execute rules exactly as written. This eliminates human bias or manipulation, ensuring all participants operate under the same verifiable conditions. For example, a DeFi lending protocol's liquidation logic is public and applies equally to all users.

A core tenet of fairness is open participation. Anyone can join the network, validate transactions, or use applications without requiring approval from a gatekeeper. This prevents exclusionary practices and creates a level playing field for users globally, contrasting with traditional finance's reliance on intermediaries and credit checks.

Participants can cryptographically verify the outcome of any process. In Proof-of-Stake systems, validator selection is determined by stake size and a verifiable random function. In NFT mints, a fair drop uses a commit-reveal scheme to prevent front-running, ensuring all participants have a transparent and auditable chance.

Miner/Maximal Extractable Value (MEV) represents a major fairness threat, where validators or bots can reorder or censor transactions for profit. Fairness-enhancing solutions include:

• Fair sequencing services that order transactions by receipt time.
• Commit-reveal schemes for sensitive actions like trades.
• Encrypted mempools to hide transaction details.

Fair systems align incentives without disproportionate advantages. This includes:

• Staking rewards distributed proportionally to stake, not identity.
• Liquidity provider fees split precisely according to contributed capital.
• Airdrops that use Sybil-resistance mechanisms to reward genuine early users instead of farmers.

A network is fair if it cannot selectively deny service. Decentralized consensus ensures no single entity can prevent a valid transaction from being included. This is critical for financial sovereignty and protects against political or competitive censorship, ensuring the network remains a neutral platform for all.

On an Automated Market Maker (AMM), traders compete to execute swaps at the best price. Without fair ordering, a malicious validator can front-run or sandwich attack a user's transaction by seeing it in the mempool, inserting their own transaction first to profit at the user's expense. This directly extracts value from ordinary users.

During a high-demand, gas-auction style mint, bots can monitor the mempool and outbid legitimate users by paying higher gas fees. Fairness mechanisms like commit-reveal schemes or Fair Sequencing Services (FSS) ensure mint order is determined by submission time, not maximal extractable value (MEV), allowing for a more equitable distribution.

Real-time games with on-chain state (e.g., chess, poker, or auctions) are vulnerable to time-bandit attacks. A validator can revert the chain to a prior state after seeing an unfavorable outcome. Fairness guarantees and instant finality are essential to prevent manipulation and ensure all players act on the same immutable game state.

In Proof-of-Stake systems, block proposers are chosen pseudo-randomly. A lack of fair leader election can lead to centralization, where large stakers are consistently favored. This undermines network security and decentralization. Fair, verifiable random functions (VRFs) are crucial for equitable validator selection.

When assets are locked on one chain to be minted on another, the relayer or validator controlling the message queue has significant power. They can censor or reorder attestations, delaying or preventing withdrawals for certain users. Fair ordering protocols prevent this central point of failure.

DeFi protocols rely on accurate, timely price data. If oracle updates are not fairly ordered, an attacker could manipulate the sequence of price updates to trigger or prevent liquidations unfairly. Fair sequencing ensures that all participants see the same price data in the same order, maintaining market integrity.

A protocol-level property that ensures transaction order is determined by objective rules (like time of arrival) rather than by miners or validators who could engage in Maximal Extractable Value (MEV). It prevents front-running and sandwich attacks by guaranteeing transaction order fairness.

A token distribution model where there is no pre-mine, pre-sale, or allocation to insiders before public availability. Key characteristics include:

• No VCs or Private Sales: Equal access at genesis.
• Transparent Initial Supply: All tokens are created and distributed via public, auditable mechanisms.
• Community-Centric: Examples include Bitcoin's genesis block and early DeFi tokens like Yearn.finance's YFI.

The profit validators or searchers can extract by reordering, including, or censoring transactions within a block. It represents a major fairness challenge, as it allows sophisticated actors to profit at the expense of regular users through tactics like arbitrage, liquidations, and sandwich attacks.

A consensus-layer attack where a miner secretly mines an alternative chain to rewrite history after observing a profitable opportunity (like a large DEX trade). It undermines settlement finality and fairness, as it allows rewriting past blocks for profit, challenging protocols like Ethereum's proof-of-stake finality.

A cryptographic technique used to ensure fairness in scenarios with hidden information. A user first submits a commitment (a hash of their data) and later reveals the data. This prevents others from copying or front-running the revealed information, ensuring fair ordering in auctions, gaming, or voting.

While related, these are distinct properties. Decentralization refers to the distribution of network control. Fairness refers to the equitable application of rules. A system can be decentralized but unfair (if MEV is rampant) or centrally managed but fair (if rules are applied impartially). True robustness requires both.