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Fairness in ERC token markets: A Case Study of CryptoKitties

7 February 2021
Kentaro Sako
Shiníchiro Matsuo
Sachin Meier
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Abstract

Fairness is an important trait of open, free markets. Ethereum is a platform meant to enable digital, decentralized markets. Though many researchers debate the market's fairness, there are few discussions around the fairness of automated markets, such as those hosted on Ethereum. In this paper, using pilot studies, we consider unfair factors caused by adding the program. Because CryptoKitties is one of the major blockchain-based games and has been in operation for an extended period of time, we focus on its market to examine fairness. As a result, we concluded that a gene determination algorithm in this game has little randomness, and a significant advantage to gain profit is given to players who know its bias over those who do not. We state incompleteness and impact of the algorithm and other factors. Besides, we suppose countermeasures to reduce CryptoKitties' unfairness as a market.

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