Impossibilities

This is a collection of impossibility results for decentralized/permissionless systems. The focus here is on math- or CS-style results.

1. Trustless cross-chain bridges are impossible: SoK: Communication Across Distributed Ledgers, 25th International Conference on Financial Cryptography and Data Security, 2021

2. Trustless escrow impossibility: Irrationality, Extortion, or Trusted Third-parties: Why it is Impossible to Buy and Sell Physical Goods Securely on the Blockchain, IEEE International Conference on Blockchain, 2021

3. You can ony have two of correctness, decentralization & cost efficiency: Blockchain Economics, Princeton University Economics department working paper, 2021

4. UTXO and account-based system decomposition impossibility: A Unifying Theory of Electronic Money and Payment Systems, TechRxiv, 2022

5. Scaling impossibility: Asset Transfer Ordering Under A No-Negative-Balance Requirement Is NP-Complete, SSRN, 2024

   • See also The Consequences Of Scalable Blockchains, blog post, 2022

   • See also Sharding Is Also NP-Complete, blog post, 2022

6. Decentralized risk-free yield is impossible: Risk-Free Interest Rates in Decentralized Finance, IEEE Fifth International Conference on Blockchain Computing and Applications, 2023

7. Capital-efficient decentralized stablecoins are impossible: Computer Science Abstractions to Help Reason About Decentralized Stablecoin Design, IEEE Access, 2023

8. Decentralized trustless oracle impossibility: An impossibility theorem on truth-telling in fully decentralized systems, BIS working paper, 2023

   • See also The oracle problem and the future of DeFi, BIS Bulletin, 2023

9. Trustless protocols cannot guarantee price stability: Can Trustless Protocols Guarantee Price Stability?, SSRN, 2023

10. Compliance impossibility: Decentralized Finance and Financial Regulation: Limits On Mutable Turing Machines, SSRN, 2023

    • See also The Compliance-Innovation Trade-off, blog post, 2022

Other collections

This blog has a slightly different focus and covers some economic-equilibrium-focused papers as well. For example a paper proving that full decentralization is incompatible with a broad class of standard economic assumptions about market participants.

And a limited selection of other economic-equilibrium papers that have come up over the years:

• Oracles

  • Decentralized Common Knowledge Oracles

  • Select-Storage: A New Oracle Design Pattern on Blockchain

  • Blockchain Oracle Design Patterns