Improving the Efficiency of Blockchain Applications with Smart Contract based Cyber-insurance

Blockchain based applications benefit from decentralization, data privacy, and anonymity. However, they may suffer from inefficiency due to underlying blockchain. In this paper, we aim to address this limitation while still enjoying the privacy and anonymity. Taking the blockchain based crowdsourcing system as an example, we propose a new smart contract based cyber-insurance framework, which can greatly shorten the delay, and enable the workers to obtain the economic compensation for increased security risk caused by a conflict between the need to provide service quickly and delay in payment. We model the process of determining insurance premium and number of confirmations as a Stackelberg Game and prove the existence of Stackelberg Equilibria, at which the utility of the requester is maximized, and none of the workers can improve its utility by unilaterally deviating from its current strategy. The experimental results show that our framework can definitely improve the time efficiency of crowdsourcing. Particularly, it takes on average only 33% of the time required by the naive blockchain based crowdsouring solution for time-sensitive cases.