Auction Mechanisms in Cloud/Fog Computing Resource Allocation for Public Blockchain Networks

As an emerging decentralized secure data management platform, blockchain has gained much popularity recently. To maintain a canonical state of blockchain data record, proof-of-work based consensus protocols provide the nodes, referred to as miners, in the network with incentives for confirming new block of transactions through a process of “block mining” by solving a cryptographic puzzle. Under the circumstance of limited local computing resources, e.g., mobile devices, it is natural for rational miners, i.e., consensus nodes, to offload computational tasks for proof of work to the cloud/fog computing servers. Therefore, we focus on the trading between the cloud/fog computing service provider and miners, and propose an auction-based market model for efficient computing resource allocation. In particular, we consider a proof-of-work based blockchain network, which is constrained by the computing resource and deployed as an infrastructure for decentralized data management applications. Due to the competition among miners in the blockchain network, the allocative externalities are particularly taken into account when designing the auction mechanisms. Specifically, we consider two bidding schemes: the constant-demand scheme where each miner bids for a fixed quantity of resources, and the multi-demand scheme where the miners can submit their preferable demands and bids. For the constant-demand bidding scheme, we propose an auction mechanism that achieves optimal social welfare. In the multi-demand bidding scheme, the social welfare maximization problem is NP-hard. Therefore, we design an approximate algorithm which guarantees the truthfulness, individual rationality and computational efficiency. Through extensive simulations, we show that our proposed auction mechanisms with the two bidding schemes can efficiently maximize the social welfare of the blockchain network and provide effective strategies for the cloud/fog computing service provider.